In a significant development for India's overseas energy interests, a potential US-led overhaul of Venezuela's oil industry could pave the way for New Delhi to recover close to $1 billion in pending dues while reviving critical crude production from its assets in the sanctions-hit nation, according to industry experts and analysts.
Stranded Assets and Frozen Dividends
India was once a major buyer of Venezuelan heavy crude, with imports peaking at over 400,000 barrels per day. This crucial supply line was abruptly severed in 2020 after the United States imposed sweeping sanctions, forcing Indian refiners to halt purchases due to compliance risks. The impact was felt acutely by India's flagship overseas producer, ONGC Videsh (OVL), which holds a 40% stake in the San Cristobal oilfield in eastern Venezuela.
Production at the field has been crippled, plummeting to a mere 5,000-10,000 barrels per day, as US restrictions blocked access to essential technology, equipment, and services. This has left commercially viable reserves effectively stranded. Financially, the situation is equally strained. Venezuela has failed to pay OVL $536 million in dividends accrued up to 2014. An additional, nearly equivalent amount remains unpaid for the subsequent period, as Caracas has refused to permit audits, effectively freezing the settlement of these claims.
A Potential Path to Revival
Analysts and energy executives suggest that sanctions could be eased if a US operation leads to the removal of President Nicolas Maduro and places Venezuela's vast oil reserves under American oversight. Such a geopolitical shift would be a game-changer for OVL's operations.
Officials familiar with the matter indicate that once sanctions are lifted, OVL could swiftly mobilize to revive output at San Cristobal. The company plans to move rigs and other critical equipment from locations like its parent ONGC's oil fields in Gujarat to the Venezuelan site. This logistical move is key to ramping up production from its current depleted state.
Implications for India's Energy Security
The unlocking of Venezuela's oil sector holds a dual benefit for India. Primarily, it offers a clear route to recover the nearly $1 billion in outstanding dues owed to its state-run explorer. Secondly, it would help diversify India's crude oil import sources and restore access to a significant volume of heavy crude, which is suited to the configuration of many Indian refineries.
The revival of the San Cristobal field would not only represent a major financial recovery for ONGC Videsh but also strengthen India's strategic energy assets abroad. It underscores how global geopolitical realignments can directly impact the economic fortunes and energy security of major consuming nations like India.
