Exclusive: India's Nayara supplying fuel to Rosneft in exchange for Venezuelan oil - sources

By Nidhi Verma and Marianna Parraga NEW DELHI/MEXICO CITY (Reuters) - India's Nayara Energy has been using Russian giant Rosneft as an intermediary to acquire Venezuelan oil, paying it in fuel rather than cash to avoid violating U.S.

Reuters October 16, 2019 02:07:11 IST
Exclusive: India's Nayara supplying fuel to Rosneft in exchange for Venezuelan oil - sources

Exclusive Indias Nayara supplying fuel to Rosneft in exchange for Venezuelan oil  sources

By Nidhi Verma and Marianna Parraga

NEW DELHI/MEXICO CITY (Reuters) - India's Nayara Energy has been using Russian giant Rosneft as an intermediary to acquire Venezuelan oil, paying it in fuel rather than cash to avoid violating U.S. sanctions, three sources with knowledge of the transactions said.

The United States in January prohibited U.S.-dollar transactions for oil sales from Venezuela's PDVSA or its units, a measure intended to cut off cash flows and increase pressure on President Nicolas Maduro, whose 2018 re-election has been dismissed as a sham by Washington.

The sanctions have made some banks wary of processing any transaction for Venezuelan oil, even if the seller is not the state-run company. They have also scared away some of PDVSA's customers, while prompting others to buy Venezuelan crude from intermediaries like Rosneft, the sources said.

In exchange for the Venezuelan oil, Nayara, part-owned by a Rosneft-led consortium, is shipping cargoes of gasoline and gasoil to the Russian firm, according to the sources, who declined to be named as they are not authorized to speak to media.

The United States further tightened sanctions on Venezuela in August, threatening non-U.S. companies with punitive action if they 'materially assist' Maduro's government.

But Washington has said that firms, including Rosneft, that take Venezuelan oil to monetize loans are not violating sanctions as long as cash does not reach Maduro's coffers.

Rosneft declined to comment. Nayara Energy and PDVSA did not reply to requests for comment.

Crude-for-fuel swaps are a way around the complications that have arisen because of the sanctions, which have virtually eliminated cash exchanges. PDVSA boosted deals involving barter and swaps following a first round of U.S. financial sanctions on the firm in 2017.

Strategies for dealing with the sanctions remain diverse. Another Indian refiner, Reliance Industries , is scheduled to resume direct loading of Venezuelan oil next week after a four-month pause, according to sources and internal documents.

Reliance bought Venezuelan oil from Rosneft during that period rather than directly from PDVSA, according to PDVSA's trade documents. But the refining firm has since opted to resume dealing with Venezuela and is also supplying PDVSA with fuels permitted under U.S. sanctions, it said last week.

Both Nayara and Reliance are long-time customers of PDVSA and the two refiners are still eager consumers of the type of heavy sour crude that the OPEC member sells, even as the U.S. sanctions have driven away many other former buyers of its oil.

Nayara doubled its intake of Venezuelan crude in August from July, while Reliance received 18% more from the Latin American nation, according to tanker data shared with Reuters by industry sources last month.

OIL FOR LOANS

Rosneft has been acting as an intermediary for most of the Venezuelan crude supplied to international markets, according to PDVSA trade documents. Rosneft accepts oil from PDVSA as payment for billions of dollars in loans extended to Venezuela over the past decade and then ships the barrels onto refineries that used to buy directly from Venezuela, including Nayara's facilities.

Rosneft now receives more Venezuelan crude than any other buyer as refiners worldwide have cut purchases to avoid violating sanctions, or because they cannot find banks to process the transactions.

China's CNPC suspended Venezuelan oil loading shortly after the latest sanctions, sources previously told Reuters, adding to Venezuela's growing inventories of unsold oil. CNPC declined to comment.

PDVSA's crude production has slumped to its lowest level in decades. In September, Venezuela's crude production averaged 846,800 barrels per day, 32 percent below target, following output cuts due to the mounting inventories, according to unofficial PDVSA figures seen by Reuters.

(Reporting by Nidhi Verma in New Delhi and Marianna Parraga in Mexico City; Additional reporting by Vladimir Soldatkin in Moscow; Editing by Christian Plumb and Rosalba O'Brien)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.