India’s exclusive confidence in oil-for-naphtha swap deal with Venezuela, sources say

By Nidhi Verma and Arathy Somasekhar

NEW DELHI/HOUSTON (Reuters) – India’s Reliance Industries plans to use naphtha supplies as partial payment for crude oil purchases from Venezuela after the refiner won U.S. approval last month to resume oil trading with the sanctioned producer, said three sources familiar with the terms of the contract. .

A source said Reliance will pay dollars for the balance of crude oil purchase. The company was forced to stop direct purchases from Venezuela in April due to the reimposition of sanctions, but in July, Washington authorized Reliance to import crude oil from Venezuela. Reliance resubmitted an application to the US in May.

Reliance, which operates the world’s largest refining complex, plans to source naphtha, a refined product, from the US to partially pay for its Venezuelan oil purchases, the sources said. The deal is similar to Reliance’s previous deals with Venezuelan state-owned company PDVSA, according to PDVSA’s export and import records. Venezuela needs naphtha as a diluent for its heavy oil.

Reliance’s two refineries in western Gujarat state can process about 1.4 million barrels per day (bpd) of crude oil. The complexity of these plants allows the refinery to process cheaper, heavier crudes such as Merey from Venezuela.

The sources declined to provide details on the volumes and duration of authorization given by the US for Reliance’s purchase of Venezuelan oil. Washington could impose new sanctions on the South American country after a disputed election, but U.S. officials have said individual oil licenses are not expected to be modified or withdrawn for now.

Reliance did not respond to an email from Reuters seeking comment.

Last year, the US granted a broad license to Venezuela’s oil industry, allowing state-owned PDVSA to export freely to chosen markets, boosting demand for Venezuela’s oil and increasing the country’s fuel imports through swaps.

But Washington in April reimposed sanctions on Venezuela’s oil sector in response to President Nicolás Maduro’s failure to meet election commitments, granting instead some individual licenses to trade and operate in Venezuela’s energy sector.

Loading schedules at Venezuelan ports are full, one of the sources said, which has caused delays in Reliance’s resumption of oil pickup. Multiple sources cited similar issues for other Asian buyers.

Venezuelan production has not increased quickly enough to fulfill contracts negotiated with existing and new customers, leading to further delays in cargo delivery since the beginning of this year. Delays have reached 60 days in some cases, affecting importers of Venezuelan oil in Asia.

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The Indian refiner limited direct shipments of Venezuelan crude earlier this year due to concerns that the license could be withdrawn at any time, one of the sources said. This could impact ships transiting or in Venezuelan ports, the source added.

Reliance’s refinery last received 2 million barrels of Venezuelan crude in June, Kpler data showed. It was not immediately clear who the supplier was.

(Reporting by Nidhi Verma in Delhi and Arathy Somasekhar in Houston; additional reporting by Marianna Parraga in Houston; Editing by Florence Tan and David Gregorio)