India’s Reliance Industries is planning to pay for Venezuelan oil partly with naphtha supplies and partly with US dollars after obtaining Washington’s approval to resume oil trade with the sanctioned nation, Reuters reported on Thursday, citing sources familiar with the matter.

Reliance, which is owned by India’s richest man Mukesh Ambani, operates the world’s biggest refining complex in Gujarat state.

Venezuela’s proven oil reserves are recognized as the largest in the world. With an estimated 303 billion barrels, the country accounts for approximately 17% of global crude oil reserves, according to the International Energy Agency (IEA). However, its energy sector has experienced severe jolts in recent years due to international sanctions and the economic crisis. Caracas has been the subject of US restrictions for over 15 years.

Reliance was forced to stop buying oil directly from Venezuela in April due to the reimposition of sanctions. However, the company submitted a request to the US to resume imports of crude from Venezuela in May. The Indian firm was authorized to resume its purchases in July, according to Reuters.

Two oil refineries owned by Reliance can process 1.4 million barrels per day (bpd) of crude oil and have the technology to process cheaper and heavier crudes, such as Merey from Venezuela. Caracas needs naphtha, which is primarily produced in North America, to dilute its heavy crude.

Oil from Venezuela is among the cheapest for India’s oil refiners, with the average cost reported at $60.60 a barrel in January this year.

In 2023, Washington granted a broad license to Venezuela’s oil industry, allowing state-run PDVSA to export to its chosen markets. In 2023, India was among the main destinations for Venezuelan crude oil exports, with an average supply of 5,000 barrels per day, according to German data-gathering firm Statista. Reliance received 2 million barrels of Venezuelan oil last June, Reuters reported, citing data from analytics firm Kpler.

India’s top explorer Oil and Natural Gas Corp (ONGC.NS) holds a 40% stake in the San Cristobal field in eastern Venezuela’s Orinoco Heavy Oil belt, with the state oil company PDVSA holding the remainder. In January, Reuters reported that Venezuela had agreed to give some oil to ONGC with a view to recouping its pending $600 million dividend.

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