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Reliance Industries, owner of India’s biggest refinery, has started buying Canadian heavy crude to replace Venezuelan imports on fears that the U.S. could take sanction action against the company.
According to a Bloomberg report, Reliance had recently signed a deal for the purchase of 2 million barrels of Canadian heavy a month for the next six months, unnamed sources close to the matter said.
India is one of the biggest buyers of Venezuela crude, despite the sanctions. The sales take the form of crude-for-fuel swaps, which are still allowed for humanitarian reasons, although Washington is seeking ways to cut these off, too. In fact, thanks to sales to India, Venezuela’s oil exports actually increased last month, after hitting all-time lows in June and July.
The August average, according to data from Reuters, stood at 437,600 bpd, versus an average of 400,000 bpd in the previous two months. It was in July that Reliance resumed its purchases of Venezuelan oil after putting them on hold for a while to make sure it won’t be slapped with sanction-breach penalties. This made it PDVSA’s largest client in August: the Indian refiner took in an average of 216,000 bpd, according to the Reuters data.
This month, according to the Bloomberg report, Reliance increased its oil purchases from Venezuela to 11.6 million barrels in total since the start of the month. This is double the August total and the highest monthly intake since March 2016, Bloomberg noted.
The crude-for-fuel swaps help to alleviate Venezuela’s gasoline shortage and do not bring cash into the coffers of the Maduro government, which is why they are still allowed. But Washington appears to be unhappy about these swaps. If they end, it would plunge Venezuela into an even worse fuel shortage and, likely, more protests would erupt as a result.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com