Reliance Industries says oil purchases from Venezuela in compliance with US sanctions

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Updated: Feb 06, 2020 9:33 PM

The company has investments in US shale gas projects and trades fuel in North America.

reliance, reliance industriesReliance had in March last year stated that it had stopped all oil exports to Venezuela and will not resume sales until sanctions are lifted.

Reliance Industries on Thursday said its purchases of crude oil from US-sanctioned Venezuela are reported and approved by the US government and that it remains in compliance with the sanctions.

The statement came in response to the Trump administration warning energy companies with ties to Venezuela to “tread cautiously”.

“All of Reliance’s purchases of Venezuela crude oil are reported to and approved by the US Government,” a company spokesperson said when asked to comment on the warning.

“We are in frequent communications with US Government officials regarding Venezuela and continuously keep them apprised of our actions,” the spokesperson said in an e-mailed statement.

Reliance, whose twin refineries at Jamnagar in Gujarat were major importers of Venezuelan crude oil, had last year reportedly slashed purchases from the Latin American country by about a third.

The US imposed economic sanctions on Venezuela in late January 2019 with a view to curb the country’s crude exports and put pressure on socialist President Nicolas Maduro to step down.

“Reliance is not sharing any oil field in Venezuela nor does it operate as an intermediary for sale to third parties,” the statement said. “All Venezuelan crude oil sourced by Reliance is for processing in Reliance’s refineries only.”

The company said it “will always remain in compliance with US sanctions policies affecting Venezuela.”

Reliance had in March last year stated that it had stopped all oil exports to Venezuela and will not resume sales until sanctions are lifted.

The company has investments in US shale gas projects and trades fuel in North America.

US oil sanctions on Venezuela do not ban importing crude oil from the Latin American nation but bar exports from the US of the diluents that must be blended with the extra-heavy oil from Venezuela’s Orinoco Belt so it can flow through pipelines.

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

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 with the firm.

These restrictions came into force on March 29, 2019 after an eight week winding down period for contracts that were already in effect.

Oil from the 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.

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