ONGC Nears Operational Control of Key Venezuelan Oil Projects

India's state-owned ONGC is expected to soon assume operational control of two oil projects in Venezuela from PDVSA, a move that would give the company direct responsibility for assets located in the country with the world's largest proven crude oil reserves. The development is expected under Venezuela's new petroleum law, which is aimed at encouraging greater participation from foreign investors after years of restrictions linked to U.S. sanctions.

During the company's June-quarter earnings call, ONGC said its overseas subsidiary, ONGC Videsh, now has full freedom to expand its activities in Venezuela as sanctions-related operational constraints have eased. The company believes new agreements under the revised petroleum framework could be signed shortly.

ONGC Videsh currently owns a 40% stake in the San Cristobal oil field, while it also holds an 18% interest in the Carabobo-1 heavy oil project together with other Indian companies. Management indicated that the revised petroleum legislation offers improved incentives for international investors and could pave the way for ONGC to take over the operatorship of selected projects from PDVSA.

The company also reported progress in another overseas asset, confirming that it regained its full 20% interest in Russia's Sakhalin-1 oil and gas project in December after a four-year disruption caused by project restructuring following Western sanctions. According to ONGC, the restored stake has increased the project's quarterly revenue contribution to around ₹10 billion, compared with approximately ₹5-6 billion earlier.

At the same time, India's purchases of Venezuelan crude have moderated after rising sharply earlier this year. Venezuelan crude exports declined in July, with shipments to India falling significantly from June as improved crude availability from the Middle East reduced Asian demand for discounted Venezuelan barrels.

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