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Venezuela turns to India as sanctions cut oil flow to U.S., Europe

Reuters  |  HOUSTON/MEXICO CITY/MOSCOW 

By Eaton, Parraga and Olga Yagova

HOUSTON/MEXICO CITY/(Reuters) - Venezuela's exports have tapered off and shifted toward since new U.S. sanctions began Jan. 28 as state-run company seeks to replace deliveries to the and that were disrupted by payment restrictions.

The South American nation is turning its focus to cash-paying buyers, especially in India, its second-largest customer after the United States, amid U.S. sanctions designed to undercut financial support for Venezuelan Sanctions are designed to bar Maduro's access to revenue that has helped his government remain in power.

In the two weeks since the sanctions were announced, has been able to load and export 1.15 million barrels per day (bpd) of crude and refined products, according to Refinitiv Eikon data. was exporting about 1.4 million bpd in the months before sanctions, according to the Eikon data.

Two supertankers, and I, launched late on Monday from carrying cargoes to Indian ports.

Ship tracking data in Refinitiv showed several other tankers carrying Venezuelan crude or fuel towards Asia, although the final destinations of these vessels were not yet clear.

But finding customers in may be difficult, analysts said, as uses its political and financial clout to pressure countries to stay clear of dealing with

addressed the issue in a special report on Venezuela, issued on Tuesday.

"Considering all the difficulties that faces in delivering oil to other markets and the legal, reputational and financial risks confronting traders or counterparties that do business with it under the current conditions," the wrote, "it seems unlikely that all production can, in short order, go to other markets."

DOUBLING SALES

Before the sanctions, PDVSA shipped over 500,000 bpd to the United States, its largest cash market, followed by then China, at above and below 300,000 bpd respectively.

[GRAPHIC: Top importers of Venezuelan crude: https://tmsnrt.rs/2RYGk2E]

has sent its oil minister, Manuel Quevedo, to India to convince refiners, including and Nayara Energy Ltd, to double their

"We are selling more than 300,000" bpd to Indian buyers, Quevedo said on Monday in "We want to double that amount."

Reliance is among PDVSA's main cash-paying customers, while Nayara receives Venezuelan oil from one of its largest stakeholders, Russian oil-giant The latter supplies PDVSA oil to Vadinar, India's second largest refinery, under a payment for loan program that dates to 2014.

should be able to continue to receive PDVSA cargoes under its oil-for-loans, according to a reading of U.S. sanctions by lawyers and traders. Nayara receives around half of Venezuelan crude supplied to Rosneft, with the remainder shipped to Europe, including Rosneft operations in

According to a trading source close both to Rosneft and PDVSA crude operations, the last cargo containing for the Russian company left Venezuela for on Jan. 30-31, containing around 1 million barrels.

"PDVSA supplies to Rosneft or its subsidiaries in India under deals clinched before the sanctions are not falling under the sanctions," said Natalia Abtseshko, group at firm

CASH STILL LACKING

Indian refineries could absorb a large portion of those barrels, but it is still unclear how cash sales would be effected without using the U.S. or European systems after April 28, the deadline set by the

Venezuela also is open to barter arrangements with India using oil as payment, its said, though Quevedo did not explain how such a system would work.

Quevedo's willingness to barter goods for oil suggests the turn may not soon resolve the country's need for cash-paying customers to replace U.S. buyers.

About 9 million barrels were stuck last week in tankers waiting for payment or discharge instructions, according to Eikon data. Most are anchored in the as Venezuelan opposition leader and self-proclaimed moves to set up escrow accounts to receive proceeds.

(Reporting by Eaton in Houston, Parraga in Mexico City, Olga Yagova in Moscow; additional reporting by in New Delhi, Gleb Gorodyankin in Moscow, and Henning Gloystein in Singapore; editing by and Marguerita Choy)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, February 13 2019. 08:22 IST
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