Reliance halts oil exports to Venezuela in view of US sanctions

New Delhi: Reliance Industries on Wednesday said it has stopped all oil exports to US sanction-hit Venezuela and will not resume sales until sanctions are lifted.

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." Reliance said it will continue a constructive dialogue with the US government to ensure Reliance remains in compliance.

President Donald Trump in January slapped oil sanctions on Venezuela. The sanctions, however, do not ban importing crude oil from Venezuela but bars imports 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 has been reduced to about 2 million barrels already. 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.

Oil from the Orinoco 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 on Monday hoped 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 US has slapped sweeping sanctions on PDVSA with a view to curb Venezuela's crude exports and put pressure on socialist President Maduro to step down.