India’s ONGC is poised to take over operation of two Venezuelan oil projects from state-owned PDVSA, which would give the Indian producer direct operational control over assets of the world’s largest proven crude oil reserves. Reuters exclusively reported Wednesday that ONGC expects to sign new agreements “very soon” under Venezuela’s new petroleum law after years of limiting its activities because of U.S. sanctions.
Speaking during ONGC’s June-quarter earnings call cited by Reuters, Finance Director Anupam Agarwal said the company’s overseas arm, ONGC Videsh, now has “full freedom” to pursue opportunities in Venezuela following the easing of sanctions-related constraints that had previously limited its activities.
ONGC Videsh currently holds a 40% stake in the San Cristobal oil field and, together with other Indian companies, an 18% interest in the Carabobo-1 heavy oil project. Agarwal said Venezuela’s new petroleum law offers additional incentives for foreign investors and expressed confidence that agreements transferring operatorship of some projects from PDVSA could be finalized soon.
“Now we have full freedom to work on the Venezuela projects. Earlier, we were restricting our operations there because of the sanctions-related risk,” Agarwal said.
Separately, ONGC also disclosed that it regained its full 20% stake in Russia’s Sakhalin-1 oil and gas project in December, after a four-year disruption following Russia’s restructuring of the project in the wake of Western sanctions.
According to Agarwal, the restored interest has doubled Sakhalin-1’s quarterly revenue contribution to roughly 10 billion Indian rupees ($105 million), up from approximately 5 billion to 6 billion rupees previously. Reuters noted that ONGC retained its stake after agreeing to make abandonment fund payments in rubles using dividends that had been frozen in Russia, according to Reuters.
The announcement also comes as India’s purchases of Venezuelan crude have cooled after a sharp surge earlier this year. According to Kpler data cited by Bloomberg, Venezuela’s crude exports fell 25% in July to about 856,000 barrels per day after shipments to India were cut roughly in half from June, as improving Middle East supply reduced Asian demand for discounted Venezuelan barrels.
By Charles Kennedy for Oilprice.com
