ONGC is in discussions with Venezuela's state-run oil producer PDVSA to purchase either a portion or all of its holdings in two oilfields located in Venezuela, according to Business Today. The deal is contingent on ONGC obtaining a license from U.S. authorities permitting it to operate the fields.
Talks with PDVSA: Seeking Sole Operator Role
Through its overseas subsidiary ONGC Videsh, the Indian company currently holds stakes in two projects. In the San Cristobal oilfield, ONGC Videsh owns a 40% participating stake, while PDVSA holds the remaining interest. In the Carabobo-1 project, ONGC Videsh has an 11% stake, with Indian Oil and Oil India each owning 3.5%. Spain-based Repsol holds 11%, and PDVSA controls the remaining 71%.
| Project | ONGC Videsh | PDVSA | Indian Oil | Oil India | Repsol |
|---|---|---|---|---|---|
| San Cristobal | 40% | 60% | – | – | – |
| Carabobo-1 | 11% | 71% | 3.5% | 3.5% | 11% |
According to people familiar with the discussions, ONGC is seeking to become the sole operator of the San Cristobal field and to share operational control of Carabobo-1 with Repsol. Acquiring PDVSA's stakes would help the company achieve greater authority over operational decisions and financial management, as ONGC has consistently sought.
US Sanctions and Licensing Requirements
Since Venezuelan President Nicolas Maduro was taken into custody in January, the United States has exercised effective oversight of Venezuela's oil industry. Foreign companies are required to secure U.S. approval before operating oilfields or handling crude sales and related revenues. ONGC has been engaging with the U.S. Treasury Department to obtain the necessary permissions, sources told Business Today. Similar licenses have already been granted to several global energy companies, including Chevron, BP, Shell, and Repsol, allowing them to conduct operations in Venezuela.
Production Decline and Potential Increase
Both the San Cristobal and Carabobo oilfields have experienced significant declines in production, reflecting the wider deterioration of Venezuela's oil sector. Current output levels could not be independently confirmed. However, ONGC Videsh Managing Director Rajarshi Gupta said in August 2024 that once ONGC took over operations, production from the two fields could increase from the then level of 12,000–15,000 barrels per day to around 30,000 barrels per day within a year. He indicated that output could subsequently rise to 45,000–50,000 barrels per day over the following years.
Dividend Recovery
The production increase would support efforts to recover more than $500 million in dividend payments that have remained pending for several years. Gupta had also said that Venezuela agreed in principle to transfer operational control of the assets to ONGC, although no formal agreements had been executed.
Previous Deal Attempts
In 2017, PDVSA proposed selling an additional 9% stake in the San Cristobal field to ONGC. The Indian company chose not to proceed with the purchase, prioritizing the recovery of dividend dues from the project before considering any increase in ownership.
Venezuela's oil industry has witnessed a prolonged decline due to a combination of depressed oil prices, economic mismanagement, and U.S. sanctions. During this period, PDVSA's operational capabilities have also weakened considerably. Following the imposition of U.S. oversight on Venezuela's oil sector and the subsequent easing of sanctions, Venezuelan crude has increasingly returned to international markets, with India emerging as one of its major buyers.
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