By Nidhi Verma and Arathy Somasekhar
NEW DELHI/HOUSTON (Reuters) – India’s Reliance Industries plans to use naphtha supplies as part payment for its purchase of crude from Venezuela after the refinery last month received U.S. approval to resume oil trading with the sanctioned producer, three sources said who were aware of the contract terms. .
One source said Reliance will pay dollars for the balance of crude purchases. The company was forced to halt direct purchases from Venezuela in April due to the reimposition of sanctions, but in July Washington allowed Reliance to import crude oil from Venezuela. Reliance had again submitted a request to the US in May.
Reliance, which operates the world’s largest refinery complex, plans to supply naphtha, a refined product, from the US to partly pay for Venezuelan oil purchases, the sources said. According to PDVSA export and import data, the arrangement is similar to previous transactions between Reliance and Venezuelan state-owned company PDVSA. Venezuela needs naphtha as a diluent for its heavy crude oil.
Reliance’s two refineries in the western state of Gujarat can process about 1.4 million barrels per day (bpd). The complexity of these plants allows the refinery to process cheaper and heavier crude oil, such as Merey from Venezuela.
The sources declined to provide details on the volumes and duration of US approval for Venezuelan oil purchases from Reliance. Washington could impose new sanctions on the South American country after a disputed election, but US officials have said individual oil licenses will not be changed or revoked for now.
Reliance did not respond to an email from Reuters seeking comment.
The US granted a broad license to Venezuela’s oil industry last year, allowing state-owned PDVSA to export freely to its chosen markets, boosting demand for Venezuelan oil and boosting the country’s fuel imports through swaps.
But Washington reimposed sanctions on Venezuela’s oil sector in April in response to President Nicolas Maduro’s failure to meet his election obligations, and instead granted a number of individual licenses to trade and operate in Venezuela’s energy sector.
Loading schedules at Venezuelan ports have been overbooked, one of the sources said, causing delays in Reliance’s resumption of oil intake. Several sources mentioned a similar problem for other Asian buyers.
Venezuelan production did not increase fast enough to meet contracts agreed with both existing and new customers, leading to more delays in cargo deliveries since the beginning of this year. The delays could extend up to 60 days in some cases, affecting importers of Venezuelan oil in Asia.
The Indian refiner had restricted direct shipments of Venezuelan crude earlier this year over concerns that its permit could be revoked at any time, one of the sources said. That could affect ships in transit or in Venezuelan ports, the person added.
Reliance’s refinery last received 2 million barrels of Venezuelan oil in June, Kpler data shows. It was not immediately clear who the supplier was.
