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Sources: India's Reliance has a crude-for-naphtha exchange deal with Venezuela

Three sources familiar with the contract terms have confirmed that India's Reliance Industries will use naptha as part payment for crude purchased from Venezuela, after the refiner received a U.S. permit last month to resume trade in oil with the sanctioned manufacturer.

Reliance is said to be paying dollars for the remaining crude. In April, the company had to cease direct purchases from Venezuela due to new sanctions. However, in July Washington allowed Reliance import Venezuelan crude. Reliance had submitted a new request to the U.S. back in May.

Sources said that Reliance, the company operating the largest refinery in the world, will supply naphtha from the U.S. as part payment for its Venezuelan oil purchase. According to PDVSA exports and imported records, the arrangement is similar with past Reliance deals with Venezuela's PDVSA. Venezuela requires naphtha to dilute its heavy crude.

Reliance’s two refineries located in Gujarat's western state can process 1.4 million barrels of crude oil per day. These plants are complex enough to refine heavier and cheaper crudes, such as Merey oil from Venezuela.

Sources declined to give details about the volume and duration of authorization granted by the U.S. regarding Reliance's Venezuelan purchase. Washington may impose new sanctions against Venezuela following a disputed presidential election. However, U.S. officials say that individual oil licenses will not be changed or withdrawn at this time.

Reliance failed to respond to an email asking for comments.

The U.S. granted Venezuelan oil company PDVSA a license last year that allowed it to export freely to the markets of its choice. This increased demand for Venezuelan oil and drove up fuel imports via swaps.

Washington reimposed sanctions in April on Venezuela's oil industry in response to President Nicolas Maduro not meeting election promises. Instead, it granted some individual licenses for trading and operating in Venezuela's Energy Sector.

One source said that the loading schedules in Venezuelan ports were overbooked. This has delayed Reliance in resuming the purchase of oil. Other Asian buyers also faced similar problems, according to several sources.

Since the beginning of this year, there have been more delays in delivering cargos due to the fact that Venezuelan production has not increased quickly enough to meet existing and new contracts. Some delays reached 60 days, which affected importers of Venezuelan crude oil in Asia.

One source said that the Indian refiner limited direct loadings earlier this year, out of concern that the license might be withdrawn at any time. The person said that this could affect vessels in transit, or at Venezuelan port.

Kpler data shows that Reliance received the last 2 million barrels Venezuelan oil from June. The source of the oil was not immediately known. (Reporting from Nidhi in Delhi and Arathy in Houston. Additional reporting by Marianna in Houston. Editing by Florence Tan, David Gregorio and David Gregorio.

(source: Reuters)