India seeks US clearance and Caracas cooperation as ONGC Videsh looks to recover years of blocked earnings from sanctioned Venezuelan oil assets
India is holding government-level discussions with both the United States and Venezuela to resolve the long-pending issue of nearly $600 million in dividends stuck for ONGC Videsh Ltd (OVL) in the South American nation, Moneycontrol reported on Tuesday, citing officials sources.
The stranded investments relate to OVL’s investments in Venezuelan oil projects that have remained largely unremunerative due to years of US sanctions on Caracas and its state oil company, Petroleos de Venezuela S.A. (PdVSA).
OVL, the overseas arm of state-run Oil and Natural Gas Corporation (ONGC), holds a 40 per cent stake in the San Cristobal field and an 11 per cent stake in the Carabobo-1 project in Venezuela. Both assets are operated by PdVSA. However, sanctions imposed by Washington severely restricted financial transactions, preventing the Indian firm from repatriating earnings for several years.
“Ministerial-level talks are underway for the stuck dividend payments from Venezuela, and we hope things will move faster now,” a source familiar with the discussions told Moneycontrol.
Sanctions choke cash flows
The two Venezuelan assets have remained underutilised amid sanctions, chronic underinvestment and payment constraints, leaving dividends and receivables effectively stranded. PdVSA had earlier agreed to compensate OVL through crude oil shipments instead of cash, but logistical and compliance hurdles limited the effectiveness of that arrangement.
In 2024, ONGC Videsh sought a ‘specific licence’ from the US Department of the Treasury to continue operations and unlock payments in Venezuela.
Venezuela’s fading role in India’s oil basket
US sanctions also sharply curtailed India’s crude oil imports from Venezuela. According to data from Rubix Data Sciences, Venezuela’s share in India’s crude imports fell to 1.1 per cent in FY21, before dropping to zero in FY22 and FY23 as Indian refiners halted purchases due to elevated compliance risks and transaction costs.
A limited revival was seen in FY24, when Venezuela’s share recovered marginally to 0.6 per cent, valued at about $802 million, following partial easing of US sanctions in late 2023.
This marked a steep decline from Venezuela’s earlier prominence. Between FY18 and FY20, the country was among India’s top six crude suppliers, accounting for 5.9–6.7 per cent of total imports. In value terms, imports peaked at $7.2 billion in FY19.
End of Article
Leave a Reply