ONGC's Overseas Arm Looks To Restart Venezuela Operations Amid Pending Dividend Dues

India's overseas energy investments may be heading for a fresh chapter. ONGC Videsh Ltd (OVL), the international arm of state-run Oil and Natural Gas Corporation (ONGC), is reviewing plans to revive its oil operations in Venezuela, even though more than $900 million in dividend payments remain locked up, according to industry executives familiar with the matter.

The development comes as Venezuela opens its energy sector to greater foreign participation under a revised legal framework, creating an opportunity for overseas investors that had been sidelined for years.

OVL's Venezuela Assets Back In Focus

ONGC Videsh has exposure to two onshore oil projects in Venezuela.

The first is the San Cristobal field in the Orinoco Belt, where OVL acquired a 40% stake in 2008, while Venezuela's state-owned oil company, PDVSA, owns the remaining 60%.

The company also has a presence in the Petrocarabobo project in East Orinoco. In this asset, OVL and Spain's Repsol each hold an 11% stake, while IndianOil and Oil India own 3.5% each. PDVSA controls the remaining 71%.

These projects have operated below their potential for several years because of US sanctions and restrictions on transactions involving Venezuela's oil sector.

An industry executive said improving economic conditions and changes in the regulatory environment are encouraging several operators to reassess their investments, with OVL also reviewing the viability of restarting activities. The revised framework is expected to allow greater flexibility in profit repatriation and restore oil and gas lifting rights.

Dividend Recovery Still Uncertain

Even as operational prospects improve, recovering long-pending dividend dues remains a separate challenge.

According to industry sources, Venezuelan authorities are encouraging foreign partners to prioritise fresh investment and higher production before seeking immediate payment of accumulated dividends. The argument is that rebuilding output is critical for reviving the country's energy sector.

Earlier reports had indicated that hundreds of millions of dollars in OVL dividends had remained blocked because of sanctions and payment restrictions.

Another factor working in OVL's favour is that Venezuela's updated regulations reportedly require investments to be routed through US-incorporated entities. Since ONGC Videsh already has a presence in the United States, it could potentially meet those conditions more easily, according to industry executives.

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What It Could Mean For India

For India, a return to Venezuelan oil projects could strengthen long-term energy security by expanding the country's supply options beyond traditional sourcing regions such as West Asia and Russia.

Venezuela is estimated to hold the world's largest proven crude oil reserves, although production has dropped sharply over the past decade. Any improvement in output and investment conditions could provide Indian companies with another avenue for overseas energy growth.

Sources:

The Economic Times

Moneycontrol