OVL, the overseas arm of Oil and Natural Gas Corporation (ONGC), has held a 40% interest in the San Cristobal project in Venezuela since 2008, with the remaining 60% owned by the country’s state oil company Petróleos de Venezuela SA (PDVSA). A PDVSA team is currently in India to discuss the long pending issue.
The outcome of those negotiations will determine whether India can recover $600 million in stranded overseas profits, restore access to one of the world’s largest oil reserves and potentially reduce its oil import bill.
“G2G talks are underway between the three countries. No conclusion has been reached yet, but things are expected to move quickly,” said one of the two people cited above, requesting anonymity.
Dividends have been payable since the tenure of the late President Hugo Chávez, when revenues from PDVSA were allocated to finance social spending. Subsequent US sanctions severely curtailed production at San Cristobal and blocked the repatriation of dividends. Earlier efforts by New Delhi to secure an exemption from sanctions or to receive oil in lieu of dollar payments have not yielded results.
Separately, OVL merged with Indian Oil Corp. Ltd and Oil India Ltd in the Carabobo-1 project, where production was also affected by US sanctions. Mint had earlier reported that any easing of sanctions following the US intervention could eventually restore India’s access to Venezuela’s vast oil reserves. Indian state-owned firms invested around $2.5 billion in Venezuela before sanctions were imposed in 2020.
“PDVSA representatives are likely to discuss this issue of stuck dividends during the ongoing India Energy Week with their counterparts,” said the second person cited above, who also asked not to be named.
In an operation after midnight on January 3, the US bombed several facilities in Caracas, captured President Nicolás Maduro and his wife, Cilia Flores, and flew them to the US. U.S. President Donald Trump later signed an executive order declaring a national emergency to protect Venezuelan oil revenues held in U.S. Treasury accounts from seizure or legal action and to ensure that funds are preserved to advance U.S. foreign policy goals.
Expert caution
But strategy experts remain skeptical of a quick fix.
“Given some of the recent comments by top US officials and the US president, I don’t see India being treated very fairly vis-a-vis Venezuela,” said C. Uday Bhaskar, director of the Society for Policy Studies.
Emailed queries to the Ministries of External Affairs and Oil and Gas, OVL, PDVSA and the US and Venezuelan embassies in Delhi remained unanswered till press time.
The mathematics of oil
While concerns remain about the productivity of Venezuela’s oil wells, any potential easing of sanctions and reopening of the country’s oil sector has raised hopes for more supplies to world markets. But Venezuela’s crude is highly viscous, making it difficult to refine and potentially forcing sellers to offer lower prices to big buyers like India.
This is significant for India, the world’s third largest oil consumer, which imports 88-90% of its oil, accounting for about a quarter of the import bill. A drop in oil prices by $1 per barrel may reduce India’s import bill ₹13,000 million crowns.
“While traders may be offering barrels to Indian refiners, the market response remains hesitant due to quality complexities and the commercial challenge of making Venezuelan crude work at current price levels,” said Sumit Ritolia, senior research, refining and modeling analyst at ship-tracking firm Kpler.
India’s already small trade with Venezuela continues to dwindle. In FY25, India’s total imports from Venezuela were US$364.5 million, with oil accounting for US$255.3 million, an 81.3% decline from US$1.4 billion in oil imports in FY24. Exports to Venezuela were limited to US$95.3 million, led mainly by pharmaceutical shipments worth US$41.4 million.
The author is in Panaji on the invitation of the Union Ministry of Petroleum and Natural Gas.
