Venezuela crisis: US grip on oil could help India recover $1 billion dues; stalled output may be revived

A US-led takeover or restructuring of Venezuela’s oil sector could bring a major financial and strategic gain for India, potentially helping recover nearly $1 billion in long-pending payments and restarting crude production from oilfields operated by Indian firms, according to analysts and industry sources.India was once among the largest buyers of Venezuelan heavy crude, importing over 4,00,000 barrels per day at its peak. These flows came to a halt in 2020 after sweeping US sanctions made purchases risky and logistically unviable, forcing Indian refiners to exit the market.

ONGC Videsh Ltd (OVL), India’s flagship overseas oil arm, jointly operates the San Cristobal oilfield in eastern Venezuela. However, output from the field has fallen sharply as US restrictions blocked access to key equipment, technology and oilfield services, leaving sizeable reserves stranded despite being commercially viable, as per news agency PTI.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 later years, but settlement has been frozen as Venezuela has not permitted audits for that period.Analysts believe sanctions could ease following a dramatic US military operation that removed President Nicolas Maduro and placed Venezuela’s vast oil resources under American oversight. US President Donald Trump has already said American oil companies would enter Venezuela to repair degraded infrastructure and restart production.Once restrictions are lifted, OVL could quickly move drilling rigs and equipment from ONGC’s fields in Gujarat to San Cristobal, officials familiar with the matter were quoted as saying by PTI. Production at the onshore field has dropped to just 5,000–10,000 barrels per day, but with additional wells and modern equipment, it can produce between 80,000 and 1,00,000 barrels per day, they said.US control would also allow Venezuelan crude exports to resume, opening a pathway for OVL to recover close to $1 billion in unpaid dues from future revenues, according to analysts cited by PTI. OVL had earlier sought a specific US sanctions waiver, similar to the one granted to Chevron, to operate and export oil.Indian firms could also 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 is the majority partner in both projects and may undergo restructuring under US oversight, analysts said.India is expected to re-emerge as a key buyer if Venezuelan supplies return. “If sanctions are eased… trade flows can resume rapidly,” said Kpler analyst Nikhil Dubey, noting that Indian refineries are technically well suited to process Venezuelan heavy crude, as quoted by PTI.Before sanctions, Venezuela exported 707 million barrels of crude annually, with India and China together accounting for 35 per cent. Exports have since halved. A US-backed overhaul could lift production within a year, analysts said, giving India a strategic alternative to Middle Eastern oil and strengthening its bargaining power in global energy markets.