By Nidhi Verma and Arathy Somasekhar
NEW DELHI/HOUSTON (Reuters) - India's Reliance Industries plans to use naptha supplies as partial payment for crude purchases from Venezuela after the refiner obtained a U.S. approval last month to resume oil trade with the sanctioned producer, three sources aware of the contract terms said.
One source said Reliance will pay dollars for the balance of the crude purchase. The company was forced to stop direct purchase from Venezuela in April due to a re-imposition of sanctions but in July, Washington authorized Reliance to import crude from Venezuela. Reliance had re-submitted a request to the U.S. in May.
Reliance, which operates the world's biggest refining complex, plans to supply naphtha, a refined product, from the U.S. to partly pay for its Venezuelan oil purchases, the sources said. The arrangement is similar to past Reliance trades with Venezuela's state company PDVSA, according to PDVSA's exports and imports records. Venezuela needs naphtha as a diluent for its heavy crude.
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 refiner to process cheaper and heavier crudes such as Merey from Venezuela.
The sources declined to provide details regarding volumes and duration of the authorization given by the U.S. for Reliance's Venezuelan oil purchase. Washington could impose fresh sanctions on the South American country following a disputed election, but U.S. officials have said individual oil licenses are not expected to be modified or withdrawn for now.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 a Reuters email seeking comments.
The U.S. last year granted a broad license to Venezuela's oil industry allowing state-run PDVSA to freely export to its chosen markets, which boosted demand for Venezuela's oil and pushed up the country's fuel imports through swaps.
But Washington in April re-imposed sanctions on Venezuela's oil sector in response to President Nicolas 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 have been overbooked, one of the sources said, which has caused delays in Reliance's resumption in taking the oil. Several sources cited similar problem for other Asian buyers.
Venezuelan production did not increase quickly enough to meet contracts negotiated with existing as well as new customers, leading to more delays to deliver cargoes since early this year. Delays reached up to 60 days in some cases, affecting importers of Venezuelan oil in Asia.
The Indian refiner had limited direct loadings of Venezuelan crude earlier this year over worries that the license could be pulled at anytime, one of the sources said. That could impact vessels in transit or at Venezuelan ports, the person added.
Reliance's refinery last received 2 million barrels of Venezuelan oil in June, Kpler data showed. It was not immediately clear who the supplier was.