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Reliance Industries Ltd (RIL) has re-started crude imports from sanctions-hit Venezuela after a four-month gap, using its diesel exports to the Latin American nation to settle the crude purchase bill.
Reliance, India’s biggest private refiner, said the barter arrangement complies with the US sanctions on the OPEC member.
“RIL has been supplying permitted products like diesel to Venezuela and hence is able to recommence crude sourcing. These are actions compliant to US sanctions as crude sourcing against supply of permitted products is allowed,” a Reliance Industries spokesperson said in an e-mailed response to Business Line, disclosing the crude quantities sourced from Venezuela.
The barter deal will help ease Venezuela's inventories after US sanctions left PDVSA with huge volumes of unsold crude.
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 had come into force on March 29 after an eight-week winding down period for contracts that were already in effect.
RIL said in March that its US subsidiary completely stopped all business with Venezuela's state-owned oil company, PDVSA, and its global parent has not increased crude purchases.
Following US sanctions, companies had shunned direct purchases in favour of secondary market sourcing through Russia's state-controlled Rosneft, which is now the primary supplier of Venezuelan oil.
The sanctions, however, do not ban importing crude oil from Venezuela, but barred supply from the US of the diluents that must be blended with the extra-heavy oil from Venezuela's Orinoco Belt so it could flow through pipelines.
Oil from the Orinoco Belt needs to be diluted with lighter grades to reduce its viscosity to facilitate its flow through pipelines to the coast for export or processing.
Venezuela -- a once-rich oil-producing nation -- is in the grip of an economic crisis in the wake of the sanctions and a political standoff between President Nicolas Maduro's government and opposition leader Juan Guaido.
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