US control of Venezuelan oil may unlock $1 billion stuck dues for India, lift output

Venezuela has failed to pay OVL USD 536 million in dividends due on its 40 per cent 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.

A US-led takeover or restructuring of Venezuela’s oil sector could bring a major windfall for India, potentially unlocking nearly $1 billion in long-pending dues while reviving crude production from oilfields operated by Indian companies in the sanctions-hit Latin American nation, analysts and industry sources told news agency PTI.

India was once among the largest buyers of Venezuelan heavy crude, importing over 4,00,000 barrels per day at peak levels. However, sweeping US sanctions and mounting compliance risks forced Indian refiners to halt purchases in 2020. India’s overseas arm, ONGC Videsh Ltd (OVL), jointly operates the San Cristobal oilfield in eastern Venezuela, but production has been severely curtailed 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. A similar amount is pending for the subsequent period, during which Caracas refused to permit audits, effectively freezing settlement of OVL’s claims.

Analysts and energy executives said 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 move rigs and equipment from locations such as ONGC’s oilfields in Gujarat to San Cristobal, reviving output that has fallen to just 5,000–10,000 barrels per day, officials familiar with the matter said. With additional wells and better equipment, the onshore field can produce 80,000–1,00,000 barrels per day, they added.

US control of Venezuela’s oil sector could also allow exports to resume, enabling OVL to recover its nearly USD 1 billion in outstanding dues from future revenues. OVL had earlier sought a ‘specific licence’ sanctions waiver, similar to one granted by the Office of Foreign Assets Control (OFAC) to Chevron.

Indian companies could also expand their footprint in Venezuela. OVL holds an 11 per cent stake in the Carabobo-1 heavy oilfield, while Indian Oil Corporation (IOC) and Oil India Ltd (OIL) hold 3.5 per cent each. Venezuela’s national oil company PdVSA is the majority stakeholder in both San Cristobal and Carabobo-1, but analysts said PdVSA could undergo restructuring following US intervention.

US President Donald Trump has said major American oil companies would return to Venezuela to refurbish its degraded infrastructure. Analysts noted that the US would still need international partners like OVL, both for technical expertise and access to key markets such as India.

“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 LinkedIn post.

India’s major refiners, including Reliance Industries, Nayara Energy, IOC, HPCL-Mittal Energy and Mangalore Refinery, are well equipped to process Venezuelan heavy crude.

“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 annually, with the US, China and India accounting for the bulk of purchases. By 2025, exports had fallen to 352 million barrels a year, with China emerging as the dominant buyer.

Analysts said a US-directed overhaul, backed by capital, technology and operational discipline, could significantly lift production within a year, adding supply to global markets. For India, renewed Venezuelan exports would offer a strategic alternative to Middle Eastern crude, reduce exposure to geopolitical shocks and strengthen bargaining power on prices.

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