India's state-owned Oil and Natural Gas Corporation (ONGC), through its overseas arm ONGC Videsh Ltd. (OVL), has secured a license from the U.S. Treasury's Office of Foreign Assets Control (OFAC) to fully resume its operations in Venezuela. This approval removes significant hurdles related to U.S. sanctions that have long complicated financial transactions and investments in Venezuela's oil sector, enabling ONGC to manage project finances and potentially recover over $500 million in pending dividends.
ONGC is now in discussions with Venezuelan authorities and its joint-venture partner, Petróleos de Venezuela S.A. (PDVSA), regarding its interests in two key projects: San Cristobal and Carabobo. OVL holds a 40% stake in the San Cristobal oil project and an 11% stake in the Carabobo project. The company aims to expand production, sign new agreements, and potentially take over operatorship of some assets from PDVSA.
Specifically for the San Cristobal oilfield, ONGC plans to invest approximately $200 million to revive production. This investment, which will also cover PDVSA's share, is expected to be deployed over the next 12 months. The goal is to boost the current production of 4,000-5,000 barrels per day (bpd) significantly, eventually aiming to restore it to its previous peak of 45,000-50,000 bpd. In fiscal year 2026, San Cristobal produced around 0.265 million tonnes of oil equivalent, which is about a tenth of its potential.
The OFAC license is crucial for ONGC as it enables investment to raise oil production and manage the finances of its Venezuelan projects. The company had previously curtailed activity due to sanctions-related risks despite its long-standing presence in the country. Venezuela holds the world's largest proven crude oil reserves, and ONGC's focus will be on shallow, onshore fields. This move is also seen as strategically important for India, the world's third-largest oil consumer, by potentially diversifying its crude oil imports.
