Key facts
- ONGC Videsh Ltd (OVL) plans to revive its oil operations in Venezuela.
- Over $900 million in dividend dues remain unpaid to OVL.
- OVL holds stakes in the San Cristobal and Petrocarabobo fields in Venezuela.
- U.S. sanctions have led to the underutilization of these assets.
- Venezuela's new legal framework permits foreign participation and profit repatriation.
- OVL is conducting technical assessments and expects to submit revival proposals soon.
State-run Oil and Natural Gas Corp's overseas arm, ONGC Videsh Ltd (OVL), is planning to revive its operations in Venezuela, despite significant unpaid dividend dues. The move comes as Venezuela, which holds the world's largest oil reserves, opens its oil sector to greater foreign participation under a new legal framework that allows for profit repatriation and restoration of oil and gas lifting rights.
OVL holds stakes in two onshore assets: San Cristobal in the Orinoco belt, where OVL has a 40% stake and Petroleos de Venezuela (PdVSA) holds 60%, and Petrocarabobo in the East Orinoco, where OVL and Spain's Repsol each hold 11%, IndianOil and Oil India each hold 3.5%, and PdVSA holds 71%.
These assets have been underutilized for years due to U.S. sanctions on Venezuela. An industry executive noted that the current economic conditions are suitable for operations, and OVL is re-examining the situation. Venezuela's revised regulations may require investments to be routed through U.S.-incorporated entities, a requirement OVL could potentially meet with its existing U.S. office.
Venezuela's oil production has fallen sharply over the past decade. The government is prioritizing investment and production growth over immediate dividend repatriation, arguing that restoring output is crucial for rebuilding the sector. OVL is currently conducting technical assessments of its producing fields and evaluating the condition of surface facilities, with revival proposals expected within the next few months, though timelines may shift due to the country's uncertain operating environment.