UPDATE 2-Reliance, Chevron defend against U.S. criticism of oil business with Venezuela

Nidhi Verma and Timothy Gardner

Venezuela@ (Adds Chevron's comments, recasts lead paragraph)

NEW DELHI/WASHINGTON, Feb 6 (Reuters) - India's Reliance Industries and U.S.-based Chevron Corp on Thursday defended their business with Venezuela from White House criticism, noting that their marketing agreements and operations in the OPEC nation have been approved by Washington. The White House on Wednesday warned several oil companies, including Reliance, Russia's Rosneft, Spain's Repsol and Chevron, to tread cautiously in their activities in Venezuela, in an attempt to ramp up pressure on Venezuelan President Nicolas Maduro. The suggestion of retaliation surprised those companies, according to executives from joint ventures with state-run PDVSA.

Washington imposed sanctions early last year on state-run oil company PDVSA in an effort to oust Maduro, whose re-election in 2018 was viewed as a sham by most Western Hemisphere nations. The White House on Wednesday hosted opposition leader Juan Guaido, whom Maduro refers to as a "puppet" of the United States, even as dozens of nations recognize him as the rightful president.

Venezuela has continued to export roughly 1 million barrels of crude and fuel per day. That is far less than previous years, as the sanctions cut off Venezuela's top importer, the United States, worsening a years-long economic crisis in the nation.

The White House announced secondary sanctions in August targeting non-U.S. companies buying Venezuelan oil, but its pressure campaign waned in the second half of 2019, and companies interpreted the announcement differently.


Reliance, among PDVSA's largest customers, in October resumed direct purchases of Venezuelan crude after a four-month pause, helping the state-run company reduce mounting inventories of unsold oil. Reliance said at that time that it was supplying PDVSA with fuel permitted under sanctions in exchange for the Venezuelan oil.

A Reliance spokesperson told Reuters that the refining firm is "in frequent communications with U.S. government officials regarding Venezuela and continuously keep them apprised of our actions."

Reliance's representative added that the company does not operate as an intermediary for sales of Venezuelan oil to third parties. "All Venezuelan crude sourced by Reliance is for processing in Reliance's refineries only."

Chevron resumed marketing of Venezuelan oil in October for the first time since sanctions were imposed, in tankers bound for Asian destinations, according to PDVSA records and Refinitiv Eikon vessel tracking data.

"We remain focused on our base business operations, in full compliance with all applicable laws and regulations" said Ray Fohr, a Chevron spokesman, adding that crude marketing is permitted under a license by the U.S. Treasury to pay for expenses related to the maintenance of operations.

Chevron said that shipments of Venezuelan crude taken by the company represented about 2 percent of the country's total exports in 2019. "If Chevron is forced to leave Venezuela, non-U.S. companies will fill the void and oil production will continue," it added.

Repsol declined to comment. Rosneft and PDVSA did not immediately respond to requests for comment.

China's state-run CNPC suspended loadings of Venezuelan crude at PDVSA's ports last year, but it has not resumed them after Washington pressured Chinese energy companies to halt trade with PDVSA.

The U.S. administration has issued waivers for U.S. service firms and some PDVSA's joint venture partners to continue operating in the South American nation. The permits are not specific about trade transactions with Venezuelan oil.

(Reporting by Nidhi Verma in New Delhi, Timothy Gardner in Washington and Marianna Parraga in Mexico City; additional reporting by Isla Binnie in Madrid and Olesya Astakhova in Moscow; writing by Marianna Parraga; editing by Jonathan Oatis and Steve Orlofsky)