Reliance vows to cap Venezuela crude purchases

Indian refiner Reliance said today it is capping its crude purchases with Venezuela to comply with US sanctions, just as its tankers are second in line behind PetroChina at Venezuela´s main Jose oil terminal today as it restarts.

"Our US subsidiary has completely stopped all business with … PdVSA, and its global parent has not increased crude purchases," Reliance Industries said today. "Since sanctions were imposed … Reliance has halted all supply of diluent to PdVSA and will not resume such sales until sanctions are lifted."

Reliance has two Very Large Crude Carriers (VLCCs) waiting to load 16°API Merey crude at Jose today, part of a backlog of dozens of tankers caused by the sanctions and a catastrophic power outage that blanketed Venezuela starting on 7 March. Loadings there are resuming today.

India vied with China as the second more important destination for Venezuelan crude before the US imposed oil sanctions on PdV on 28 January. The sanctions effectively cut off the US market, leaving China and India as the top destinations.

Reliance and Russian state-controlled Rosneft´s Indian refining unit Nayara have been among the leading buyers of Venezuela´s heavy sour crude in recent years. The two have combined crude-processing capacity of 1.76mn b/d.

The US sanctions also immediately halted US sales of diluent to PdV. Venezuela needs naphtha to transport its extra-heavy crude from the Orinoco extra-heavy oil belt to Jose, where it is upgraded into synthetic crude or blended into Merey. Reliance was among the companies that sold naphtha to PdV.

The US sanctions do not have a secondary dimension, but the US is encouraging other buyers such as India to limit purchases. US officials have hinted that the sanctions could be tightened to include other countries, but parallel sanctions on Iran limit that option.

PdV has lobbied India to help offset some of the loss of revenue from the cutoff of sales into the US with increased shipments. PdV chief executive and oil minister Manuel Quevedo made a surprise appearance at the Petrotech oil conference outside New Delhi in February and pledged to double crude sales to Indian refiners.