New Delhi: The US’s swift capture of Venezuela’s dictator, Nicolas Maduro, and the possible takeover of its government could come as a boon for India’s ONGC and other Oil Marketing Companies(OMCs), as the long-standing US sanctions on Venezuelan oil are expected to be lifted. For ONGC, this could mean receiving almost $500 million in unpaid dividends from its operations there through its subsidiary ONGC Videsh Limited (OVL).
Following the sanctions in 2014, production at ONGC’s oil wells in Venezuela’s San Cristobal Project came to a halt, with payments freezing. Besides this, Indian Oil Corporation (IOC) and Oil India have also invested in oil production through their 18% stake in the Carabobo-1 field.
With the US’s takeover of the Latin American country now imminent, ONGC and IOC are hoping for the realisation of their profits, which have been pending for more than a decade. Along with that, ONGC can now continue to develop its second investment in the country, a 11% stake in another field in Carbobo, where it has a 11% equity stake.
Venezuela has the world’s largest proven oil reserves, but the country’s political instability and economic sanctions have prevented it from effectively using them. At one point, India bought more than 400,000 bpd of crude from Venezuela, which has dropped to 63,000 bpd today.
With the US swiftly arresting Maduro in a late-night raid on the Presidential palace in Caracas on January 2, there is hope for better days for Venezuela and the global economy. Opening up of the oil sector could help reduce oil prices, boosting economic output worldwide.
