Introduction

India and Latin America are often not the most obvious trading partners. For the longest time it was the proverbial tyranny of geography that stifled the possibility of fostering robust relations between India and Latin America and the Caribbean (LAC).

Geographical distance, a language barrier, differences in culture, and a general lack of connectivity have often been cited to explain the absence of strong relationships between India and LAC. However, the relationship between India and LAC have evolved with the times and are on an upward trajectory albeit few obstacles. Among other sectors, energy has proven to be a promising sector for both regions and has seen a boost in the recent times since the Caribbean nations of Guyana and Suriname have discovered significant amounts of crude oil.

Latin America and the Caribbean region has been blessed with natural resources especially crude oil and natural gas, Venezuela and then Brazil have used their hydrocarbon reserves to play their hand in the politics of regional supremacy. Now as India has begun to diversify their energy partners, LAC seems like an obvious choice.

This article attempts to follow the trajectory of growth of the relationship between India and Latin America and the Caribbean from the parameters of growing energy partnerships. It would be an attempt to gauge the challenges to these partnerships in a rapidly changing world considering the influence of great power politics, logistical challenges given conflicts in maritime systems, climate change and necessities of environmental conservation, and a push towards transitioning to alternative sources of energy.

Significance of India- Latin America Ties in the Energy Sector

India today stands at an interesting precipice with regards to its energy matrix and its future energy needs. The country’s economy is estimated to grow at an average rate of about six per cent annually. Such economic growth relies on continuous supply of energy. It is important to highlight that while New Delhi is attempting to make a transition to cleaner fuels and there is a general push to switch to renewable sources of energy, contrary to intuition the reliance on hydrocarbon derivatives has not been diminished by any significant extent. There is an understanding that while a policy is needed where India’s energy matrix features greener choices in larger percentage; it can’t afford to erase coal, crude oil, and natural gas. Therefore, it is of utmost importance that India continues to find energy partners that can provide an affordable, reliable, and continuous supply of hydrocarbon derivative fuel.

The traditional energy partners for India tend to be located largely in West Asia, and recently Russia, and some in West Africa. However, as India has started to expand its ambit of energy security partnerships, Latin America and the Caribbean came to the fore.

Latin America and the Caribbean have a few advantages when compared with other traditional energy providers of the world. Owing to its large geographical size the region contains fuel resources that can be categorised in all different categories of energy resources. India has already been exploring and establishing these relationships with countries across the LAC region. Brazilian Petrobras, Mexican Pemex, and Colombian Ecopetrol have all signed trade deals with India about crude oil. Venezuela’s PDVSA was also a trading partner previously however, now oil trade with Venezuela is more sporadic in nature given the current political situation of the country and the sanctions levied by the US. Guyana is now emerging as a new energy partner as they discovered a significant amount of crude oil off its coast in the Caribbean Sea, owing to the Orinoco River Basin which is said to contain some of the largest reserves of crude oil in the world.

There are also countries that already supply and are potential suppliers of Liquid Natural Gas (LNG). Argentina in South America Trinidad and Tobago in the Caribbean are two countries that contain vast resources of natural gas. While Argentina entered an agreement in India about the supply of natural gas earlier this year, Trinidad has supplied LNG to India in the past, and with new discoveries of gas fields in the exclusive economic zone of the country, the dwindling supply can potentially be boosted again.

The LAC region is also a potential source of biofuels, and critical minerals. Brazil runs the world’s most successful bio-fuel programmes called – PROALCOOL and produces a sugarcane-based ethanol fuel which can easily be replicated in India. It is also important to note that Argentina, Bolivia, and Chile together form the Lithium Triangle and hold some of the largest reserves of Lithium in the world. India has signed an agreement with Russia regarding the exploration and excavation of Lithium. However, it is an under researched sector at the moment which holds great potential for the future.

India – LAC Energy Landscape: A Comprehensive Analysis

Oil: diversification and diplomacy

If India’s portfolio of crude oil imports was examined, one would find that it is still dominated by the countries of West Asia and Russia post the Russia – Ukraine conflict. To put this into context with data, in the first half of 2025 about forty per cent of Indian crude oil from West Asia, and a close second is Russia standing at thirty-seven per cent of the total imports. Nevertheless, the expansion in role played by Latin America and the Caribbean is slowly but surely expanding. This expansion holds strategic significance. The rest of the imports constitute a mix of oil from Brazil, Mexico, and also the US including small amounts from the Caribbean as well.

Earlier this year in February, during the India Energy Week, Bharat Petroleum (BPCL) ad Petrobras (Brazil’s national oil company) signed a framework supply contract. This agreement has led to an increase in the Brazilian supply of crude oil to India and the aim is to expand Brazilian supply to up to six million barrels per year for the first year with subsequent increase in the supply. This formal agreement concretised Brazilian contribution to India’s crude oil demands, thereby highlighting India’s efforts of diversification of supply.

Petrobras is expanding its upstream activities which would in turn lead to an expansion of overall production of crude oil in Brazil. This expansion after a long and tough recession comes as a boon for Brazil and for India as India gets an opportunity to increase its imports in addition to becoming one of the principal refining destinations for Brazilian crude as Brazil set up new Floating Production Storage and Offloading (FSPO) Units in and around its pre-salt fields . This has translated to a bolstering of crude oil exports from Brazil and presents a great opportunity for India to expand its refining services. At the moment, ONGC Videsh (OVL) and Bharat Petro Resources (BPRL) also possess Brazilian Offshore blocks. However, this is a sector that still has opportunities for private players from India in the oil and gas sector.

In 2016, under the Presidential regime of the erstwhile President Pena Nieto, Mexico introduced a series of reforms in various sectors from education to energy. A country that was known to toe the line of resource nationalism opened up its energy sector to global players, and presented the world with an alternative to traditional oil economies. Mexico has been a supplier of heavy Maya Crude. However, the export from Mexico is now returning to its core ideal of resource nationalism and energy sovereignty. It is now prioritising the refining of its crude oil locally to boost its own refining capacity by emphasising the Olmeca (Dos Bocas) refinery. This is an example that showcases the possibility of rapid change in supply from a country that was for long considered a stable partner. Thereby reiterating the need for constant diversification in energy security partnerships.

Colombia at the moment looks promising. There have been a number of high level visits between India and Colombia, and as both countries attempt to forge a stronger relationship robust energy trade can be used as a mile stone. India is one of the largest refining hubs in Asia. Ecopetrol has shown interest in signing long term contracts with India and as the exports from Colombia have steadily grown, India has become the third largest market of Colombian crude oil. Colombia supplied a medium sour crude which translates to a sulphur content of more than 0.5 per cent per unit and that neither too light nor too heavy when its density is compared with water. These properties are important when it comes to refining of the product.

Venezuela is an unpredictable market. For the longest time, Venezuela was the leading supplier of oil, one of the first non-West Asian country to be a part of the Organisation of Petroleum Exporting Countries (OPEC) and a socialist oil economy that was constantly fighting sanctions from the US. It would not be untrue to state that Venezuela still contains vast crude oil reserves. However, the political upheaval in the country has rendered its crude oil reserves useless. Venezuela needs an intervention in domestic politics and also an influx of new technology to revive its oil fields. The situation is not helped by the constant oscillation between relief from sanctions and new economic sanctions levied by the US. In the recent tirade of sanction by the U.S., a tariff of twenty-five per cent was announced on the buyers of Venezuelan oil. This is quite a deterrent for any possible importer.

Guyana is projected to be the next big oil economy with estimated output slightly increasing approximately 1 million barrels per day (bpd) by 2026. Guyana has been reluctant to enter into long term contracts with other countries or corporations at the moment, justifiably so in an attempt to best safeguard their recently found assets. However, India has been courting Georgetown for some time as New Delhi realised early on that the potential safeguards are huge as a Petro-state and India’s diaspora connection in Caribbean especially in Guyana could certainly be leveraged to build a better relationship. To this effect, India and Guyana signed and MoU on hydrocarbons in November 2024. This MoU covered crude sourcing, gas, infrastructure, and capacity building. It was signed during a high-profile visit by the Indian Prime Minister. While this initial agreement is a positive show of intent; the actual flows will still be dependent on Guyana’s allocation policies.

While the above analysis looks promising, it is important to be cognizant of the fact that India is continuously working to diversify its suppliers to be more resistant to geopolitical shocks and sanction politics due to larger political shifts. At the moment, the oil supply from Latin America and the Caribbean is not completely replacing that from West Asia and Russia. It is unlikely that LAC would ever become a complete substitute but opening more pathways to India’s present energy supply chains is the ultimate goal where LAC can and is playing a pivotal role.

Latin America as a Potential Supplier for Natural Gas

At the moment Latin America and the Caribbean region is not a prominent natural gas supplier for India which is mostly supplied in the form of Liquified Natural Gas (LNG). However, some countries in the region display potential to be medium term options.

Argentina in South America and Trinidad and Tobago in the Caribbean have been shaping up as potential suppliers of LNG could influence medium-term options.

Argentina’s Yacimientos Petroliferos Fiscales (YPF) signed an MoU with ONGC, GAIL, and OVL in January 2025. The MoU indicates the intent of Argentina potentially exporting up to 10 million tonnes per year of LNG to India. While this seems like an easy development, it is important to note that this potential supply hinges on the shale gas field of the Vaca Muerta. The gas trapped here would be extracted and liquified by an offshore rig. The importance of the MoU is undoubted. However, this project is still in its infancy, and it is unclear whether it would be technically and even financially viable. However, India’s constant engagement with Argentina and identifying supply potential early on is testament to India’s strategic thinking and long-term plans.

In May of 2025, Trinidad and Tobago improved its LNG production by a massive forty three per cent. This rise in LNG production took place through Altantic LNG which is a privately held company with some state participation through National Gas Company of Trinidad and Tobago. This rise meant a rise in sales as well. However, Trinidad has been selling LNG at a cost that is about fifteen to fifty-five per cent higher than the Henry Hub benchmarks, which is the US benchmark price. Trinidad’s principal buyers have been Europe where the demand for LNG has risen since the Russia – Ukraine conflict. However, India and other Asian buyers are also closely watching the Trinidadian LNG market waiting for the eventual price adjustment and also as a potential candidate for counter-cyclical strategies.

Peru is steadily growing as an LNG supplier to the global market and its exports have risen from 57 cargoes in 2024 to 60 in 2025. However, Peruvian cargoes are sold on the spot market rather than through long term contracts, which translates to larger fluctuations. LNG output from Peru also heavily depends on the pipeline maintenance. Peru does have the potential to be a long-term partner once stable trade long-term frameworks and robust gas infrastructure is in place.

It is important to note that Bolivia which contains the largest deposits of Natural Gas has also been in talks with India about becoming an energy partner. However, feasibility studies still need to be done about logistics around the possible supply from Bolivia.

India is also domestically preparing to import larger quantities of LNG. India is expanding and upgrading its LNG regasification (regas) terminals. While there have been some delays in the expansion plans of Petronet, the contracts for the expansion have already been signed and the capacity building for greater imports would not be hampered which is instrumental is guaranteeing cheap, reliable, and constant supply of energy.

Commercialising Bio - fuels

India and Brazil co-founded the Global Biofuel Alliance (GBA) in September 2023 under the aegis of G20. The GBA has since its inception built a work programme, produced white papers, and organised ministerial roundtables including one at the India Energy Week 2025.

Biofuels are developmental Industrial Policy. They not only offset carbon emissions by basing themselves on agricultural products for instance sugarcane in Brazil and grains in India; they also simultaneously increase rural incomes by leveraging agricultural strengths.

Brazil and India share a common vision when it comes to biofuels. India has updated its National Biofuel Policy and it now shares regulatory framework with Brazil’s RenovaBio. In 2020, an MoU was also signed by the two countries on Bioenergy Cooperation and Joint Working Group was constituted to sustain technical channels. At the moment, India has an ethanol capacity of close to sixteen billion litres. Bio-fuel linkages give India not only a chance to diversify from its hydro-carbon derivatives, it also gives a nod to South-South cooperation.

Lithium Triangle and the Southern Cone

India is cognizant of the vast deposits of Lithium found in Argentina, Bolivia, and Chile. India is strengthening its ties with Argentina in other sectors as well to gain early accessibility to the Lithium deposits. In 2024 India’s Khanij Bidesh India Ltd. (KABIL) signed as exploration agreement with Argentinian CAYMEN worth about twenty-four million USD. The agreement was to explore and then develop five lithium rich salt flats also called lithium brine blocks. Other Indian PSUs like the MECL are also working with Argentine authorities in the lithium rich Catamarca region. In February 2025, owing to the constant high-level visits between India and Argentina, a wider agreement was signed between the two countries that focused not just on Lithium but also other important mineral that could be found in the region.

The strategic hedging by India by securing upstream Lithium activities is to secure availability to Lithium resources for Electronic Vehicles or EV and stationary storage supply chains. It will result in deepening the interdependence between LAC and India and aligns with India’s attempts to minimise risk in transoceanic battery inputs.

These developments have taken decades of building relationships and are not without their challenges.

Challenges To the India – LAC Energy Framework

Maritime Chokepoints, Climate Stress, and the Cost of Distance

The pursuance of ensuring energy supply from a region that is at a great physical distance is not without its challenges. Oil and gas trade from Latin America is solely based on supply through the maritime system and it would not be false to point out that the maritime system globally has been particularly under duress owing to the ongoing conflicts as well as due to environmental degradation and climate change.

To point out a few instances, in 2023 due to the attacks by the Houthis in the Red Sea, all cargo flows had to be diverted through the Cape of Good Hope, which significantly increased both the time and the cost of the delivery. While this was an example of conflict-based obstacle to smooth logistics, there are also problems caused by rapid climate change. In 2023-24 the drought in the area caused significant drops in the water level of the Panama Canal which is instrumental for passage through the Americas connecting the Pacific to the Atlantic. This drop in the water level meant that big vessels which characterize inter-oceanic mercantile traffic could not pass through the Panama Canal which forced rerouting through. While there has been a slight recovery from the drought in 2025. However, it was estimated that till May of this year approximately sixteen per cent of the global container capacity was still suffering from long term delays and detours which would invariably be added to the final cost of crude.

The Panama Canal is not the only transit point that has been suffering the consequences of climate change. Suez has also been suffering, both due to conflict and degradation of the environment. UNCTAD and IMF have analysed and estimated that there had been close to a fifty per cent decrease in traffic through the Suez Canal in early 2024. While there has been a slight recovery since then, it is not enough to make up for the losses.

Volatile Sanctions

There is also the problem of sanctions. In 2025 the threat of US sanctions on buying from Venezuela and also broadly from Russia underlines the constant risks in the oil and gas sector that can greatly hamper the very free market economy that the US advocates. While most LAC suppliers would be a great addition to the energy supply basket, they would not be enough at least in their present capacity to completely off set large shocks from the system.

Resource Nationalism and Domestic Restructuring

Mexico is an apt example of the dwindling supply due to domestic restructuring. Most LAC countries do focus on resource nationalism due to their past experiences with colonialism and intense exploitation of their resources by outsiders. However, a sudden shift in domestic policy to balance in-house political expectations often translates to sudden decreases in global supply.

These changes can also be predicted in Petrobras’s future as the country works towards managing domestic expectations and reaching their climate change goals of decarbonisation. This warrants against overly relying on one particular country and to keep a close check on the domestic pulse of the nation.

Gaps in Project Execution

There is often a gap between policy and execution. The preliminary stages of political courtship, agreement, and joint explorations may take place with relative ease, if one were to use the word ease with the parameters of global partnerships. The execution of the project does not always follow the prescribed plan. The Argentine – India collaboration on Lithium seems to be following the same trajectory. The journey from exploration to development and then on to production and export seems to be an odyssey that is rife with the decrypting provincial and national politics of Argentina as well as figuring out and establishing infrastructure needed to energy transitions while balancing community consent.

Conclusion

India and Latin America and the Caribbean might not be obvious trade partners, but they do hold potential. It is an under explored relationship that should be given the priority and focus that would help in its consolidation and growth. LAC offers India an entire spectrum of energy resources and also gives India the strategic leverage it needs to ensure reliable and affordable supply of energy for its citizens. The lack of geographical proximity that India and LAC suffer from has traditionally been a hurdle when it comes to building robust partnerships and bringing consistency in trade. However, as energy markets around the world fall prey to continuous geopolitical upheaval and technological advancements become the norm in transportation, the costs of a longer route are often outweighed by the possibility of a partner that does not come with geopolitical baggage.

Russian oil helped India save on revenue since the Russia – Ukraine conflict in 2022, but since 2025 this relationship has not been without its problems. The greater game of geopolitics has made it difficult to continue buying crude oil from a country that is not favoured by the West. With the intermittent conflict in West Asia as well, the volatility of the traditional West Asia oil economies has increased manifold, thereby increasing the chances of fluctuation in prices as well as supply of crude.

The Latin American and Caribbean region presents India with a refreshing alternative without great power baggage. This does not discount the challenges that India and LAC face in fostering and building a resilient partnership. However, it is important to build stable networks to ensure diversification of energy markets. LAC is a welcome addition to the Indian Crude oil basket, and it stands to compliment the Indian refining industry as well since it has a combination of heavy, light, and medium crudes and sour and bitter grades as well. As the LAC region expands its upstream activities, India has the potential to a be natural partner to the region.

It is also important to note that LAC is not only important for hydrocarbon derivatives like crude oil and natural gas, it is also important for newer frontiers of energy resources that have the potential to be a massive sector in themselves like Lithium. All of this is supported by a growing presence of India in other sectors like pharmaceuticals, automobiles, telecommunication, IT, and the food industry.

India and LAC need to find similarities in their needs and the solutions to their problems; they must build upon potential partnerships that are complementary in nature and find ways of collaborating at the global stage.

Author

Dr. Aparajita Pandey

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