Reliance Industries said on Saturday it is not in violation of the US sanctions on Venezuela and had purchased crude originating from the Latin American nation from companies such as Russia’s Rosneft in full knowledge of US authorities.
In a statement, Reliance said reports suggesting that it was involved in an arrangement that leads to cash payment for oil supplies to Venezuelan national oil company PDVSA via third parties are “false and reckless”.
“Reliance has purchased Venezuelan crude oil from companies such as (Russia’s) Rosneft long before the imposition of the US sanctions, as they do get title to Venezuelan oil in return for reduction in their prior debt.
“Since sanctions were imposed, Reliance has made such purchases with the full knowledge and approval of the US Department of State (USDOS), and Reliance has informed USDOS of specific volumes and transactions. Such transactions do not lead to any consequent payment to PDVSA and do not violate US sanctions or policies,” it said.
Reliance said its price agreement with such sellers is at market price and payments are settled in cash or by product supply bilaterally between it and such sellers.
“It is false to suggest that Reliance would be settling such shipments via Rosneft to PDVSA. In these transactions, PDVSA is only the original physical supplier, as the crude oil originates in its export facilities,” the statement said.
Reliance had last month stated that it had stopped all oil exports to US sanctions-hit Venezuela and will not resume sales until sanctions are lifted.
Reliance, whose twin refineries at Jamnagar in Gujarat were major importers of Venezuelan crude oil, has reduced purchases by about a third.
The US imposed economic sanctions on Venezuela in late January 2019 with a view to curb the country’s crude exports and put pressure on socialist President Nicolas Maduro to step down.
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 company had said last month. “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.”
US oil sanctions on Venezuela do not ban importing crude oil from the Latin American nation but bar 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 with the firm.
These restrictions came into force on March 29 after an eight-week winding down period for contracts that were already in effect.
Oil from the Orinoco Belt 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.