US approval for OVL lead operatorship request in Venezuelan oil projects expected after Nov election: Sources

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Approval from Washington, DC, for ONGC Videsh Limited’s (OVL) request to be the lead operator of two Venezuelan oil projects—an effort by the company to repatriate dividends stuck in the country—is expected only after the conclusion of the presidential election in the US, said people with direct knowledge of the matter.

The overseas arm of state-run explorer Oil and Natural Gas Corporation had sought a special licence from the Office of Foreign Assets Control of the US Department of Treasury for the Venezuela projects. OVL has pending dividends to the tune of $500 million stuck in the South American country.

“The political situation in Venezuela has worsened recently. Any response to the request for approval is expected after the US elections,” a senior government official told Moneycontrol. The 2024 US presidential elections will be held in November to determine whether Democratic nominee Kamala Harris or Republican nominee Donald Trump will be the next American president.

The official said that OVL had earlier received a comfort letter from the US that said the company could lift oil from Venezuela but should not have any US touchpoints. However, such approval would not help OVL in recovering dividends from the country, the official added.

OVL’s dividends from its two fields in Venezuela have been stuck due to US sanctions against the country. The company has two fields in Venezuela, San Cristobal and Carabobo-1.

Queries sent to ONGC remain unanswered at the time of publishing.

OVL managing director Rajarshi Gupta had told reporters on August 30 that the company has applied to the US for a specific licence to be the lead operator for the two fields in Venezuela and is awaiting a response.

The special licence that OVL has applied for gives the company rights over the Venezuelan projects’ finances and operations, which would enable the Indian company to recover its dividends and also ramp up production from the fields. US oil major Chevron was the first company to receive a licence from the US to operate projects in Venezuela.

The current total production from the two fields in Venezuela is 12,000 barrels per day (bpd) and is expected to reach 45,000 bpd in four to five years, Gupta has said earlier.

OVL has a 40 percent stake in San Cristobal and 11 percent in Carabobo 1.

Indian oil companies have also been unable to recover dividends stuck in Russia due to payment-channel restrictions since the war between Russia and Ukraine began in 2022. The government official said India is looking into resolving the issue.

According to an Indian Express report, India’s public sector oil companies’ dividends stuck in Russia have ballooned to around $900 million.