India’s Reliance Industries to skirt US sanctions by selling naphtha to Venezuela through its Indian and European subsidiaries

Reliance Industries Ltd. has started selling oil products including the popular diluent naphtha to PDVSA Venezuela from its Indian and European subsidiaries after it suspended oil product sales to the troubled Venezuelan company from its U.S. subsidiary to avoid getting punished for sanction violations.

Reuters reports, citing shipping data, that India’s largest oil refiner had sent at least three tankers with oil products to Venezuela in the last few weeks and has scheduled another one to carry a load of gasoil.

The news comes on the heels of another report from Reuters that quoted Azerbaijan’s energy ministry with a statement saying that Venezuela had stopped exporting crude to India, a key market along with China and Russia.

“Russia and China are seen as the main destinations because of the suspension of oil exports to India,”  the statement said, adding “[Venezuela Oil Minister] Quevedo said in order to prevent a sharp reduction, various measures are being implemented and diversification of the export market is underway.”

The U.S. sanctions on Venezuela’s oil at the end of January essentially cut off Venezuelan exports to the United States. Washington has also warned other countries against buying oil from Nicolas Maduro’s regime and has been pressing India to refrain from buying Venezuelan crude.

The U.S. cannot force other economies to completely stop buying Venezuelan crude under its sanctions, but this could happen if Washington imposes so-called secondary sanctions that would target companies based outside the United States.

Reuters reports Venezuela has been importing fuel and diluents at a daily rate of 160,000 bpd since the latest round of U.S. sanctions came into effect. It needs the diluents to make its extra-heavy oil liquid enough to be loaded on tankers. According to Reuters shipping data, there is a tanker at the Venezuelan Jose port right now about to start its journey to India despite Quevedo’s declaration of export suspension.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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