After India-US Talks, Reliance Halts Its Oil Transactions With Venezuela

New Delhi, March 14: Reliance Industries on Wednesday announced that it had put a halt to all oil imports to Venezuela and would not resume transacting with the Nicolas Maduro government until the U.S. government lifted its sanctions.

Reliance, whose twin refineries at Jamnagar in Gujarat were a major importer of Venezuelan crude oil, has reduced purchases by about a third. "Since the US government imposed sanctions on the Government of Venezuela in late January 2019, Reliance Industries Ltd has been in close contact with representatives from the US State Department to ensure full compliance," a company spokesperson said.

Reliance has investments in US shale gas projects and trades fuel in North America. "Our US subsidiary has completely stopped all business with Venezuela's state-owned oil company, PdVSA, and its global parent has not increased crude purchases," the spokesperson said. "In addition, since sanctions were imposed and contrary to some news reports, Reliance has halted all supply of diluent to PDVSA and will not resume such sales until sanctions are lifted."

Oil from Venezuela’s Orinoco belt needs to be diluted with lighter grades to reduce its viscosity so as to allow its flow through pipelines to the coast for export or processing. US Secretary of State Mike Pompeo had in his talks with India’s Foreign Secretary Vijay Gokhale expressed his hope that India will not be the "economic lifeline" to the "authoritarian" regime of Venezuelan President Nicolas Maduro by purchasing oil from the Latin American country. The announcement by Reliance comes just a day after Gokhale met with Pompeo in Washington DC.

Industry sources said Reliance had a contract to buy some 3 million barrels of crude oil from Venezuela a month, which has been reduced to about 2 million barrels already.

President Donald Trump in January slapped oil sanctions on Venezuela including PDVSA with a view to curb Venezuela's crude exports and put pressure on socialist President Maduro to step down. Venezuela's oil revenues account for about 98 per cent of export earnings and hence the Trump Administration is hoping to cut off this lifeline for Maduro.

The sanctions, however, do not ban importing crude oil from Venezuela but bars exports from the U.S. of the diltuents that must be blended with the extra-heavy oil from Venezuela's Orinoco Belt so it can flow through the supply pipelines.

Venezuela's state-owned oil company, PDVSA, has been placed on the US Treasury Department's Specially Designated Nationals list, which generally prohibits American citizens from dealing with named firms or individuals. This has resulted in international banks and shipping companies as well as Reliance ceasing any transactions.

These restrictions come into force on March 29 after an eight week winding down period for contracts that were already in effect. (With Agency inputs)

(The above story first appeared on LatestLY on Mar 15, 2019 12:14 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).