Why Is ONGC Eyeing Venezuela Oilfields? Here’s What the Proposed PDVSA Deal Says

State-owned Oil and Natural Gas Corp, India’s largest oil and gas producer, is again looking at Venezuela to boost its overseas energy portfolio. The company is in talks with Venezuela’s state-owned oil giant PDVSA to buy a bigger stake or even full ownership of two oilfields in which it already has investments, an Economic Times report said. Yet the deal on offer is anything but simple. But ONGC will need to get approval from US authorities before it can proceed, as US sanctions oversee Venezuela’s oil sector. Granted the permissions, the acquisition could boost India’s long-term energy security, revive ageing oilfields and unleash pending dividends running into hundreds of millions of dollars.

Why is ONGC interested in buying more stake in Venezuela?

ONGC is in negotiations with Venezuela’s state-run oil company PDVSA to purchase all or some of its stake in San Cristobal and Carabobo-1 oilfields, the Economic Times said. ONGC Videsh Ltd (OVL), the company’s overseas arm, is already present in both the projects. With more equity, ONGC would have greater say in operations, investments and production planning, which it has been wanting for years.

Discussions are at an early stage, and U.S. regulators would need to approve any deal.

Which oilfields are involved?

ONGC Videsh Current Holding:

40% stake in the San Cristobal oilfield, which is otherwise owned by PDVSA (60%);
11% interest in the Carabobo-1 project.

Ownership structure of Carabobo-1:

PDVSA – 71 per cent
ONGC Videsh – 11%
Repsol 11%
Indian Oil Corporation 3.5%
Oil India – 3.5%

ONGC aims to be the only operator of the San Cristobal field, sharing operational control of Carabobo-1 with Spain’s Repsol, the report said.

Why does ONGC need US approval?

This is the biggest hurdle for the proposed acquisition.

The United States oversees Venezuela’s oil industry following changes in the political and oil administration earlier this year. This means that foreign companies need licences from the US Treasury Department before they can operate oilfields, sell crude or receive revenues from Venezuelan assets.

ONGC has already been in touch with US authorities to get necessary approvals, reports have said.

Several international energy companies, including Chevron, BP, Shell and Repsol, have already been granted similar licences to operate in Venezuela.

Why Venezuela is reopening its oil industry

The country possesses the world’s biggest crude reserves, but oil output has plunged over the past decade. A combination of tumbling oil prices, economic chaos, lack of investment and U.S sanctions has crippled state oil producer PDVSA and slowed many wells from producing oil.

Foreign investment is being encouraged again, with some US sanctions recently relaxed. Venezuela’s crude exports hit a seven-year high in May, with notable increases in shipments to countries including India and the United States.

How can ONGC benefit from greater control?

The company believes that taking operational control could substantially increase production from the two ageing assets.

In 2024, ONGC Videsh managing director Rajarshi Gupta said that within a year, production would rise to about 30,000 barrels per day from 12,000-15,000 barrels per day, with ONGC taking the lead. If the investments come through, it could rise to about 45,000-50,000 barrels per day in the long term, he said.

More production would also help ONGC recover over $500 million in dividend payments that have been stuck for years.

Has ONGC tried this before?

For the ONGC, this is not the first time such a practice happened. Back in 2017, Venezuela’s state-run PDVSA allowed ONGC to take an additional 9% in San Cristobal, but the latter decided against adding more investment in the company for now and settled for recovering the unpaid dividend.

In 2024, interest in the company was revived when Venezuela said it was ready to give up operational control, but no formal deal was signed then.

What does this mean for India’s energy security?

India imports about 85% of its crude oil needs and overseas oil assets are of strategic importance.

If ONGC is successful in acquiring larger stakes and operational control, it could:

• Boost crude production from our existing overseas assets.
• Diversify India’s long-term energy sources
• Enhance India’s footprint in one of the world’s largest oil reserve regions.
• Better returns from investments that have been underused for years.

But the whole thing depends on whether ONGC gets the required US licence to operate the Venezuelan fields.

What is the road ahead for ONGC?

The intended acquisition is not simply about increasing ownership. For ONGC, it is an opportunity to revive underperforming assets, recover long-pending dividend dues and expand India’s overseas energy footprint. The talks are still subject to big geopolitical and regulatory uncertainties until the firm gets regulatory clearance from the United States, he said.

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