India's upstream exposure in Venezuela in spotlight amid differing US, industry signals

Indian upstream investors in Venezuela are optimistic that partial sanctions relief could facilitate dividend recovery and enable the restructuring of their joint ventures, while a comprehensive political reset may unlock expansion opportunities in a sector that remains a strategic priority for New Delhi, according to analysts and industry sources Jan. 13.

"We are hoping that things will progress in the right direction and help Indian companies, such as Oil and Natural Gas Corp., Oil India Ltd. and Indian Oil Corp., yield returns on their investments," said a source at an Indian upstream company.

Indian state-run oil companies entered Venezuela in 2008 to secure heavy crude resources and diversify upstream portfolios.

ONGC Videsh, the company's overseas arm, holds a 40% participating interest in the San Cristobal project through its subsidiary ONGC San Cristobal BV, according to the company's website. The project is a joint venture with Venezuela's state-owned oil and gas company PDVSA under Petrolera Indovenezolana SA, or PIVSA.

In 2010, ONGC, along with Indian Oil and Oil India, participated in the Carabobo-1 project located in the Orinoco Belt. ONGC Videsh holds 11% equity in the Carabobo project, while Indian Oil and Oil India, which participated through IndOil Netherlands BV, a 50:50 JV, have a combined 7% stake, according to the ONGC Videsh website and S&P Global Energy.

"These ventures were strategic bets on Venezuela's vast heavy oil reserves, aimed at strengthening India's energy security through long-term crude supply integration," said Mansi Anand, analyst for research on national oil companies at S&P Global Energy CERA.

As of March 31, 2025, ONGC's cumulative investment in Venezuela was about $770 million, split between San Cristobal ($529 million) and Carabobo-1 ($240 million), according to CERA.

Despite these investments, production remains minimal -- 1,870 b/d from San Cristobal and 970 b/d from Carabobo-1 in fiscal year 2024-25 (April-March) -- contributing less than 1% to ONGC's international output, underscoring operational challenges and geopolitical constraints, according to CERA.

As of March 31, 2025, ONGC reported that Carabobo held 98 million barrels of oil equivalent of proven and probable reserves, while PIVSA accounted for 24 million boe, a figure broadly unchanged from the previous year.

However, the exceptionally high discount rates used by ONGC for impairment testing -- 21.97% for Carabobo and 18.45% for PIVSA -- highlighted significant geopolitical and economic risks, sanctions-related constraints and uncertainty regarding future cash flows, according to CERA.

While Oil India's exposure in Venezuela is comparatively smaller, it remains affected by the same challenges, the company has said.

Potential sanctions relief

Sanctions on Venezuela have disrupted exports, financing, shipping and dollar-based transactions, while heightened political risk has curtailed diluent supply and blocked cash flows, according to Anand.

"Even during partial sanctions relief, unresolved legal and geopolitical overhang has limited normalization, leaving Venezuelan assets as long-dated options rather than contributors to production growth or cash flow," Anand said.

"The future of Indian NOCs in Venezuela hinges on political and regulatory clarity. Under the status quo, production decline and capital lock-in will persist, forcing companies to maintain minimal operational readiness," she said. "Partial sanctions relief could enable dividend recovery and JV restructuring, while a full political reset may unlock expansion opportunities -- but would require billions in capital expenditure to restore infrastructure."

Strategic alignment with energy transition goals and environmental, social and governance considerations will be critical, as heavy oil projects encounter heightened scrutiny, according to CERA. For the time being, Indian NOCs are anticipated to maintain a cautious approach, focusing on risk mitigation rather than aggressive expansion.

US President Donald Trump has vowed to secure $100 billion in new investment for Venezuela's dilapidated energy sector. However, US and international oil executives have offered differing pledges on investing in Venezuela's oil industry, following the US's Jan. 3 seizure of Venezuelan President Nicolás Maduro.

"If things improve, Indian investments in Venezuelan oil fields and the locked-in revenue due to sanctions could open up, and ONGC Videsh could greatly benefit from it," DLN Sastri, former director of oil refining and marketing at the Federation of Indian Petroleum Industry, told Platts earlier in January.