Reliance Industries Ltd., Venezuela’s top customer in India, has capped oil purchases from the Latin American country and halted selling diluent following U.S. pressure to cripple President Nicolas Maduro’s government.
“Our U.S. subsidiary has completely stopped all business with Venezuela’s state-owned oil company, PDVSA, and its global parent has not increased crude purchases," a Reliance spokesman said in an emailed statement. “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."
Reliance is India’s biggest private refiner, with a capacity of 1.36 million barrels a day. It imported about 270,000 barrels a day, or roughly 80 percent of India’s total oil imports from Venezuela in 2018, according to data compiled by Bloomberg.
India, replaced the U.S. to become the biggest buyer of Venezuelan oil in February, roughly one month after the U.S. ratcheted up sanctions. In March it’s expected to load five supertankers of Venezuelan crude -- three for Reliance -- down from seven in February, when the company took six, according to preliminary data from shipping reports and vessel tracking compiled by Bloomberg.
The nation’s private refiners -- Reliance Industries and Nayara Energy Ltd. -- are the primary buyers of Venezuela oil, because their advanced refining systems can process the thick Venezuelan grade into high-value fuels such as gasoline, low-sulfur diesel and jet fuel.
“Since the U.S. government imposed sanctions on the Government of Venezuela in late January 2019, Reliance Industries Limited has been in close contact with representatives from the U.S. State Department to ensure full compliance," according to the statement. "We will continue a constructive dialogue with the U.S. government to ensure Reliance remains in compliance.”
Reliance used to conduct business with Venezuela via its U.S. unit, but moved all transactions to its trading desk in India after the January sanctions, according to a person with knowledge of the situation. The company used to supply fuels and diluents produced in the U.S. to Venezuela in exchange for crude oil, the person said.
The Indian government has warned companies to halt purchases of Venezuelan oil or face undisclosed consequences, M.M. Kutty, India’s top most official in the oil ministry, said in Houston on March 12.