US oversight of Venezuelan oil may unlock $1 Billion dues for India, boost output

A potential US-led takeover or restructuring of Venezuela’s oil sector could deliver a significant financial and strategic gain for India, potentially unlocking close to USD 1 billion in long-pending dues and reviving crude production from Indian-operated fields in the sanctions-hit nation, analysts and industry sources said.

India was once a major processor of Venezuelan heavy crude, importing over 4,00,000 barrels per day at peak levels. Purchases, however, came to a halt in 2020 following sweeping US sanctions and rising compliance risks.

ONGC Videsh Ltd (OVL), India’s flagship overseas oil producer, jointly operates the San Cristobal oilfield in eastern Venezuela. Output from the field has plunged as US restrictions blocked access to critical technology, equipment, and services, leaving commercially viable reserves stranded.

Venezuela has failed to pay OVL USD 536 million in dividends due on its 40 per cent stake in the field up to 2014, along with a near-equivalent amount for subsequent years. Caracas has refused to permit audits for the later period, effectively freezing settlement of the claims.

Analysts say sanctions could be eased following a dramatic US operation that removed President Nicolas Maduro and placed Venezuela’s vast oil reserves under American oversight. Once restrictions are lifted, OVL could redeploy drilling rigs and equipment—potentially from ONGC’s oilfields in Gujarat—to San Cristobal, reviving output currently languishing at 5,000–10,000 barrels per day.

With additional wells and modern equipment, the onshore field has the potential to produce 80,000–1,00,000 bpd, officials familiar with the matter said. ONGC already owns rigs suitable for such operations.

US control of Venezuela’s oil sector could also enable exports to resume, allowing OVL to recover its nearly USD 1 billion in past dues from field revenues. Earlier, OVL had sought a specific sanctions waiver similar to the licence granted by the US Office of Foreign Assets Control (OFAC) to Chevron.

Indian companies could also expand their footprint in Venezuela’s Carabobo-1 heavy oilfield, where OVL holds an 11 per cent stake, while Indian Oil Corporation and Oil India Ltd each own 3.5 per cent. Spain’s Repsol holds another 11 per cent, with Venezuela’s national oil company PdVSA remaining the majority stakeholder.

Analysts expect PdVSA to undergo restructuring under US oversight. While its stake could be diluted or transferred, international partners such as OVL are likely to retain their holdings.

US President Donald Trump has said major American oil companies would return to Venezuela to refurbish its degraded infrastructure. Analysts note Washington will still require international partners like OVL—not only for operational expertise but also for access to key markets such as India.

“If sanctions are eased, Venezuelan barrels could quickly return to Indian refineries,” said Nikhil Dubey, Senior Research Analyst at Kpler. Indian refiners including Reliance Industries, Nayara Energy, IOC, HPCL-Mittal Energy, and MRPL have the technical capability to process Venezuelan heavy crude efficiently.

Before 2019, Venezuela exported 707 million barrels of crude annually, with India and China together accounting for 35 per cent. By 2025, exports have fallen to 352 million barrels, with China absorbing the bulk.

For India—the world’s third-largest oil importer—renewed Venezuelan exports could diversify its crude basket, reduce exposure to geopolitical shocks, and strengthen its bargaining power on prices. Analysts say a US-backed overhaul could lift Venezuelan output significantly within a year, adding supply to global markets and bringing greater price stability.

“Indian refiners are structurally configured for Venezuelan heavy crude,” a former oil executive said. “If production rises and payments normalise, trade can restart almost immediately.”