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India’s Reliance Industries has suspended shipments of much-needed diluents to Venezuela’s PDVSA and will not resume them until U.S. sanctions against the South American country are not lifted.
Reuters quoted a statement by the company as saying Reliance has also not raised the amount of oil it buys from PDVSA under a 2012 contract that stipulated it would buy between 300,000 and 400,000 bpd of Venezuelan crude for a period of 15 years. However, Reuters calculations suggest that Reliance has been importing less than 300,000 bpd from Venezuela since 2018.
Reliance was supplying diluents necessary to make the extra heavy Venezuelan crude fluid enough to be loaded on tankers from its U.S. subsidiary. Before the January sanctions, the country imported an average 100,000 bpd of naphtha to use as diluent at a naphtha/crude rate of 1:4. Most of these imports came from the United States.
Now Washington is tightening the noose, and companies that do business both in the United States and in Venezuela are heeding its instruction to stop the latter.
Reliance is India’s largest refiner and operator of the biggest refining complex in the country. It is also part of a sprawling global conglomerate that has close ties to the U.S. financial system hence its precarious position with regard to the Venezuelan sanctions.
“Since the U.S. government imposed sanctions on the government of Venezuela in late January 2019, Reliance Industries Ltd has been in close contact with representatives from the U.S. State Department to ensure full compliance,” the company told Reuters.
Meanwhile, PDVSA’s U.S. business, Citgo, has got a new board of directors appointed by the self-declared interim president of Venezuela, opposition leader Juan Guaido with the assistance of the United States, which is seeking to replace Nicolas Maduro with Guaido before new elections are held in the embattled country.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.