US licences for India's Venezuelan oil purchases mask ground realities

While GL 46A allows financing activities related to transactions, alongside are sanctions on dealings with Venezuelan state oil company PdVSA

A wave of Indian optimism sparked by the United States easing control over Venezuelan oil is hitting ground realities. Two weeks after Washington issued a licence allowing Indian refiners to resume direct purchases of cheap crude, industry officials and global analysts say the expected surge in flows is being tempered by logistical and operational hurdles.

 

These realities include confusion over the sanctity of the “general licence” 46A (GL) issued by Washington allowing non-US companies such as Reliance Industries, with US offices, to directly purchase oil from Venezuela bypassing traders, who eat into margins. Of the five GLs issued this month by Washington, India may see limited gains from GL 46A only. 

Reliance is qualified to buy Venezuelan crude oil directly from Venezuela’s state-owned oil company, Petróleos de Venezuela S.A. (PdVSA), under GL 46A issued by Washington on February 10. But actual purchases are yet to happen, said a senior refining official in India. Reliance’s US office is waiting for a formal announcement or clarification from Washington on details of how much oil can be bought directly or whether it allocates volumes, the official said. Reliance declined to comment on market matters. 

Indian state-run refiners are not eligible to import directly from Venezuela for lack of a US office, two senior officials from state refiners said. While they have options, especially Indian Oil, to pursue opening an office in the US and requesting Washington for an exception under the GL, Venezuelan oil does not hold much value for state refiners — as it does for Reliance — to pursue such moves, a top trader at a state refiner said. 

There is another catch for purchases under the new GL, the official said. In the past, PdVSA offered Reliance 60 days’ credit on purchases, with payments made after the cargo landed in India, a procedure also followed with Russian crude oil imports. Under the new GL, Reliance must pay upfront for Venezuelan oil sourced from PdVSA into the US-administered Foreign Government Deposit Funds.

 

Also unclear is how comfortable are banks making payments for Venezuelan oil purchases, a senior industry official said. While GL 46A allows financing activities related to transactions, alongside are sanctions on dealings with PdVSA. Unless these strictures are completely lifted, banks may be reluctant to process trades or channel investments, the official said. Contracts under GL 46A with Venezuela or PdVSA must be governed by US law and contain US dispute resolution clauses.

 

Indian refiners have contracted for 8 million barrels of Venezuelan Merey oil from traders, including Vitol and Trafigura, for shipments landing in March and April, an industry analyst said. That includes at least 2-3 million barrels of oil for Reliance Industries, 2 million for Indian Oil, 1 million barrels each for Bharat Petroleum and HMEL, according to four senior officials of state refiners and a ship tracking analyst.

 

New Delhi has urged Indian state-run refiners to actively consider imports of Venezuelan oil lying in storage after US President Donald Trump announced this year that India will increase imports of both US and Venezuelan oil, two senior industry officials said. Besides Indian Oil, which has its limitations with refinery configurations and blending infrastructure for Venezuelan oil, other refiners are reduced to making token purchases of the dirty, acidic Merey grade.

 

India is yet to receive a Venezuelan cargo this year — the last parcel of 2 million barrels of heavy and high sulfur Merey grade aboard the Andromeda arrived in May 2025. It was processed at Reliance’s Jamnagar refinery, typically the biggest buyer of oil from the country, according to shipping data from Kpler.

 

General licences

 

The answer to why companies like Reliance are unable to commence purchases despite a GL while banks seek clarity over new trade rules lies embedded in the two-decade-old sanction regime, industry officials said.

 

Venezuela has been under some form of US sanctions for the last two decades. In the wake of the disputed reelection of Venezuelan President Nicolás Maduro in January 2019, PdVSA was subjected to a US asset freeze. The US Treasury Department’s Office of Foreign Assets Control (OFAC) cut off the company from all transactions and dealings with US persons, and exposed non-US persons to secondary sanctions risks if they provided material support to PdVSA. That was followed by Trump’s executive order 13884 restricting transactions with all businesses owned 50 per cent or more by PdVSA or the Venezuelan government.

 

But beginning January, after US special forces captured Maduro, OFAC has worked to bring Venezuela’s energy industry back online, by issuing various general licenses, according to a note by Arturo Banegas Masia, a partner at Akeman LLP. US.

 

The GLs authorise a range of activity with Venezuela’s oil sector. GL 46A allows certain activities involving Venezuelan-origin oil, authorises “established U.S. entities” to undertake transactions “to the lifting, exportation, reexportation, sale, resale, supply, storage, marketing, purchase, delivery or transportation of Venezuelan-origin oil,” subject to certain restrictions.

 

An “established U.S. entity” is “any entity organized under the laws of the United States on or before January 29, 2025,” a timestamp that prevents state refiners from becoming eligible for direct purchases of Venezuelan oil. But Reliance Industries, by virtue of its involvement in US shale assets, crude oil and ethane imports, qualifies under this GL if it does not deal with any sanctioned entity, notified by OFAC, an industry official said.

 

The GL also allows non-US persons to engage in transactions or provide transportation and logistics services, marine insurance or for the financing of related cargoes or receivables. There are also stringent reporting requirements to the US Department of State and the US Department of Energy.