ONGC’s overseas arm applied for a sanctions waiver to access $500 million dividend from two Venezuelan projects.
Kindly note the image has been published only for representational purposes. Photograph: Kind courtesy ONGC
The effort by ONGC Videsh Limited (OVL) and other Indian public sector oil companies to repatriate dividends stuck in Venezuela may pose a bigger immediate challenge than managing the loss of crude imports, following the latest US push to sideline the South American nation, officials said.
OVL, the overseas arm of State-owned Oil and Natural Gas Corporation (ONGC), has more than $500 million in dividends from its Venezuelan assets stuck in the country.
Oil-marketing major Indian Oil Corporation Ltd (IOCL) and upstream company Oil India Limited (OIL) also have participating interest in one of these stuck projects.
On March 21, 2025, US President Donald Trump announced a 25 per cent tariff on countries purchasing oil and gas from Venezuela beginning April 2.
Part of the Trump administration’s tough stance on the Venezuelan regime that it considers to be directly hostile to US interests, the move is expected to cut off India’s access to Venezuelan crude, which made up 0.92 per cent of India’s overall crude imports in FY25.
The latest development could push back OVL’s efforts to secure a waiver from the US State Department and the Office of Foreign Assets Control (OFAC).
The waiver, if granted, would have exempted OVL from sanctions and allowed it to operate in Venezuela using US entities and the US dollar, the officials said.
“The licence was sought to gain proprietorship in the two projects, similar to what had been given to an US oil producer. However, it would be difficult to secure it now in the current environment. But we will move to raise the matter as part of discussions with Washington DC,” a petroleum ministry official said.
Stuck dividends
OVL had acquired a 40 per cent stake in the San Cristobal field in Venezuela in 2008, with Venezuelan State-owned Petroleos de Venezuela, S.A. (PdVSA) holding the remaining stake.
Located in the Junin Norte block in Venezuela’s massive Orinoco Heavy Oil Belt (known as the Faja), the field is the world’s largest heavy oil deposit and was estimated to have 232.4 million barrels of recoverable crude, yielding up to 100,000 barrels per day.
The deal was ONGC’s first involvement in Venezuela and it had agreed to a total investment of $355.8 million, including a $173.1 million signing bonus.
OVL had last received annual dividends worth $56.224 million for oil produced from the field back in 2008. But dividends worth about $500 million remain stuck at the moment.
“The idea so far has been to sell the share of oil owed to OVL to interested buyers. But the latest move will make it harder,” a public sector refinery official said.
He pointed out that an agreement was signed by the parties to settle outstanding dues through installment payments.
OVL had received three installments totaling $88 million until March 2017, but the mechanism had broken down afterwards.
In January 2024, petroleum ministry officials had said Venezuela had agreed to supply oil to OVL in lieu of the unpaid dividends.
OVL also holds an 11 per cent participating interest in Petrocarabobo, a joint venture established in 2010 to produce oil in Venezuela’s Carabobo region.
IOCL and OIL each hold a 3.5 per cent stake in the project, while PdVSA (71 per cent) and Repsol (11 per cent) own the rest.
Production in these two projects began in December 2012. By August 2024, OVL officials estimated crude production at 12,000 to 15,000 barrels per day, with potential to expand to 45,000 to 50,000 barrels per day in the next two to three years.
Crude flows to stop
Officials said they were monitoring further US directives on sanctions waivers but said crude flows from Venezuela to India would stop.
Venezuelan crude accounted for $1.01 billion of the $109.3 billion worth of crude imported by India in the first nine months of FY25.
Currently, only Reliance Industries Limited imports from the country having secured an official clearance from US authorities last year.
While public sector refiners wait for a similar waiver, some had begun making ‘second order transactions’ to source it from companies who already have the waiver, sources at the ministry of petroleum and natural gas had said in September.
The US had imposed sanctions on Venezuela’s oil sector back in 2018, after the socialist government of Nicolas Maduro returned to power.
These sanctions had been eased in October, 2023, but were re-imposed in April, last year.
However, the US State Department made an exception for US companies to operate in Venezuela.
Feature Presentation: Aslam Hunani/Rediff.com
