Sanctions relief on Venezuela may reopen the strategic oil channel for India
US-led takeover of Venezuela‘s oil sector is expected to deliver a direct benefit to India in unlocking close to USD 1 billion in long-pending dues while accelerating the revival of crude production from fields it operates in the sanctions-hit Latin American nation, said many Industry analysts. India was once a major processor of Venezuelan heavy crude, importing more than 4,00,000 barrels per day at peak levels, until sweeping US sanctions and rising compliance risks forcibly shut down purchases in 2020.
India’s overseas producer, ONGC Videsh Ltd (OVL), jointly operates the San Cristobal oilfield in eastern Venezuela, but output has been severely curtailed as US restrictions blocked access to critical technology, equipment, and services – leaving commercially viable reserves effectively stranded. Venezuela has not yet paid dues to OVL, USD 536 million in dividends due on its 40 percent stake in the field up to 2014, and a near-equivalent amount for the subsequent period for which Caracas has refused to permit audits, effectively freezing settlement of the claims.
The US takeover will lead to lifting the current sanctions, leading to payouts to OVL. Once sanctions are eased, OVL can move rigs and other equipment from places, such as its parent ONGC’s oil fields in Gujarat, to San Cristobal to revive output that has plummeted to 5,000-10,000 barrels per day, said Indian officials.
India’s news agency PTI reported that the onshore field can produce 80,000-1,00,000 bpd with more wells and better equipment, they said, adding that San Cristobal needs rigs similar to those operating in Gujarat, and Oil and Natural Gas Corporation (ONGC) owns many such rigs. US control of the Venezuelan oil sector also means exports to the world would start soon, and OVL can recoup its past USD 1 billion dues from San Cristobal from such revenues, said the officials.
In fact, OVL had sought a ‘specific licence’ sanctions waiver, similar to one Office of the Foreign Assets Control (OFAC) had granted to Chevron to operate the oilfield and export oil from it. OVL and other Indian firms can also take more fields in Venezuela and revive production from the Carabobo-1 Area – another Venezuelan heavy oilfield with Indian interest. OVL holds 11 percent interest in Carabobo-1, while Indian Oil Corporation (IOC) and Oil India Ltd (OIL) hold 3.5 percent stake each. Venezuelan national oil company Petroleos de Venezuela SA (PdVSA) is the majority stakeholder in both San Cristobal and Carabobo-1.
Post the US action, PdVSA may undergo restructuring, analysts said. In the worst-case scenario, its stake can be taken over by a US company or any new entity that Washington may erect. OVL and other international companies – Repsol of Spain has 11 percent stake in Carabobo-1 – are most certainly likely to continue in the projects with their holdings, analysts said.
US President Donald Trump has already stated that, as part of the takeover, major US oil companies would return to Venezuela, which has the world’s largest oil reserves, and refurbish badly degraded oil infrastructure. Analysts said the US cannot replace all the international companies and will need firms like OVL, not just for their expertise but also for the market they bring in. India will be a key buyer of Venezuelan crude once the Latin American country is able to restore its lost glory with help from the US and other companies.
“If sanctions are eased – as seen in past geopolitical episodes, such as Panama in 1990, when aid and trade restrictions were lifted shortly after the removal of General Manuel Noriega – trade flows can resume rapidly. Under such circumstances, Venezuelan barrels could again return to Indian refineries,” said Nikhil Dubey, Senior Research Analyst at Kpler, in a post on LinkedIn.
Major Indian refiners, such as Reliance Industries, Rosneft-based Nayara Energy, IOC, HPCL-Mittal Energy, and Mangalore Refinery, have the complexity needed to run these grades efficiently in blends to produce fuels like petrol and diesel. “India is actively diversifying its crude basket – not only to reduce its dependence on Russian oil, but also amid ongoing India-US trade discussions, where lowering exposure to Russian barrels remains a key theme. In that context, if sanctions on Venezuela are eased, Venezuelan crude could offer additional flexibility to Indian refiners and help ease supply concentration risks,” Dubey said.
Before 2019, Venezuela exported 707 million barrels of crude oil a year, with the US absorbing about 32 percent and China and India absorbing 35 percent. By 2025, exports have declined to 352 million barrels a year, with China taking 45 percent and unknown others taking 31 percent. Venezuela holds the world’s largest proven oil reserves – 303 billion barrels, which are more than 267 billion barrels of Saudi Arabia, but output has collapsed due to underinvestment, mismanagement, and sanctions.
For India, the world’s third-largest oil importer, renewed Venezuelan exports would offer a strategic alternative to Middle Eastern crude, reduce exposure to geopolitical shocks, and strengthen its hand in price negotiations. “Indian refiners are structurally configured for Venezuelan heavy crude,” said a former oil executive.
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Trump is turning to be a headache for India. He will release that money only when we permit to all USA corn to be sold in Inda. Trump is worst leader of USA till date