Venezuela Crisis: US Control Over Oil May Help India Recover $1 Billion in Dues

A potential US-led restructuring of Venezuela’s oil sector could offer India a significant financial and strategic opportunity, including the recovery of nearly $1 billion in long-pending dues.

And the revival of crude production from oilfields operated by Indian companies, according to analysts and industry sources. India was once among the largest buyers of Venezuelan heavy crude, importing more than 4,00,000 barrels per day at its peak. These imports stopped in 2020 after sweeping US sanctions made transactions risky and logistically unviable, forcing Indian refiners to exit the market.

ONGC Videsh Ltd (OVL), India’s overseas oil arm, jointly operates the San Cristobal oilfield in eastern Venezuela. Output from the field has fallen sharply as US restrictions blocked access to critical equipment, technology, and oilfield services, leaving large reserves stranded despite being commercially viable, news agency PTI reported.

Venezuela has also failed to clear dividend payments owed to OVL. According to industry sources cited by PTI, Caracas has not paid $536 million linked to OVL’s 40 per cent stake in San Cristobal up to 2014. A similar amount is due for subsequent years, but settlement has been frozen as Venezuela has not permitted audits for that period.

Analysts say sanctions could ease if the US assumes oversight of Venezuela’s oil sector. US President Donald Trump has said American oil companies would enter Venezuela to repair degraded infrastructure and restart production.

Once restrictions are lifted, OVL could rapidly redeploy drilling rigs and equipment from ONGC’s fields in Gujarat to San Cristobal, officials familiar with the matter told PTI. Production at the onshore field has dropped to 5,000–10,000 barrels per day, but with additional wells and modern equipment, output could rise to 80,000–1,00,000 barrels per day, they said.

US oversight would also allow Venezuelan crude exports to resume, opening a pathway for OVL to recover close to $1 billion in unpaid dues through future revenues, analysts cited by PTI said. OVL had earlier sought a specific US sanctions waiver—similar to the one granted to Chevron—to continue operations and exports.

Indian firms could further expand their presence in Venezuela. OVL holds an 11 per cent stake in the Carabobo-1 heavy oil block, while Indian Oil Corporation and Oil India own 3.5 per cent each. Venezuela’s state-owned PDVSA, the majority partner in both projects, may undergo restructuring under US oversight, analysts said.

India is expected to re-emerge as a major buyer if Venezuelan supplies return. “If sanctions are eased, trade flows can resume rapidly,” said Kpler analyst Nikhil Dubey, noting that Indian refineries are well suited to process Venezuelan heavy crude, as quoted by PTI.

Before sanctions, Venezuela exported about 707 million barrels of crude annually, with India and China accounting for nearly 35 per cent of shipments. Exports have since fallen by nearly half.

Analysts said a US-backed overhaul could lift production within a year, giving India an alternative to Middle Eastern oil supplies and strengthening its leverage in global energy markets.