New Delhi: The recent change in power dynamics in Venezuela could benefit India’s state-owned oil company ONGC, potentially unlocking $500 million in outstanding dues, according to a brokerage report.
Global brokerage firm Jefferies stated that following recent US actions, the evolving situation in Venezuela’s oil sector might enable ONGC to receive dividend payments that have been on hold.
Experts suggest that with increased US influence over Venezuela’s oil industry, sanctions on Venezuelan crude exports might be lifted.
However, US President Donald Trump has maintained that restrictions on Venezuela’s oil exports will continue. He warned that any future easing could increase crude oil supply in global markets, potentially putting downward pressure on prices.
The report highlights that if conditions improve, ONGC stands to gain, as the company is owed approximately $500 million in dividends from the San Cristobal project for the period up to 2014.
Production in the region was halted after 2014, resulting in no dividend payments in subsequent years.
ONGC holds its stake in Venezuela’s oil sector through its overseas arm, ONGC Videsh Limited (OVL).
The company has a 40 percent interest in the San Cristobal project. Additionally, OVL, along with Indian Oil Corporation and Oil India, holds an 11 percent stake in the Carabobo-1 oil field.
Jefferies cautioned that despite some short-term positives, a potential revival of Venezuela’s oil production poses medium-term risks for ONGC.
Increased output from the country could raise global supply and exert pressure on crude oil prices, impacting upstream oil companies.
Commodity experts note that the US-Venezuela conflict has added a geopolitical risk premium to oil prices, even if the immediate effect on global supply remains limited.
Aamir Makda, commodity and currency analyst at Choice Broking, stated that Venezuela currently produces between 800,000 to 1.1 million barrels of oil per day, which is about one percent of the global supply.
He added, “Although the immediate impact on global oil supply is limited, a change in control over Venezuela’s vast oil reserves could significantly affect crude oil prices and long-term supply forecasts.”
My name is Ganpat Singh Choughan. I am an experienced content writer with 7 years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
Leave a Comment