ONGC dividend stuck as sanctions re-imposed on Venezuelan crude oil

OVL earlier announced importing oil from Venezuela in lieu of stuck dividends worth $600 million but it had not received any oil after the lifting of sanctions, said an official.
Image used for representational purposes only.
Image used for representational purposes only.

NEW DELHI: The re-imposition of sanctions on Venezuelan crude oil by the US has disrupted ONGC Videsh Limited (OVL), the overseas arm of India’s state-owned Oil and Natural Gas Corporation (ONGC), plan to retrieve its dividend worth $600 million stuck in Venezuela.

The company is planning to deploy its legal and marketing teams to address the issue. OVL earlier announced importing oil from Venezuela in lieu of stuck dividends worth $600 million. But the company had not received any oil after the lifting of sanctions, said an official. “Our legal and commercial teams are studying the proposal. Will revert back once clarity emerges,” ONGC Videsh sources said.

This development comes amid the US re-imposing sanctions on Venezuelan crude oil. The US had previously eased these sanctions in October 2023, allowing Venezuela to resume crude exports. However, citing concerns about a lack of progress on democratic principles ahead of Venezuela’s July elections, the Biden administration opted not to renew a key license that expired on April 17, effectively re-imposing sanctions.

According to the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), a General License (GL) has been replaced, prohibiting US companies from initiating new business ventures in Venezuela’s oil sector. However, a grace period exists until May 31, 2024, allowing them to complete existing deals.

India last imported Venezuelan crude in 2020 when the US imposed secondary sanctions on the nation. Until 2019, India was Venezuela’s third-largest purchaser, after the US and China, importing roughly 300,000 b/d on average.

Post-lifting the sanction, India emerged as the top buyer of Venezuelan crude for two consecutive months of December 2023 and January 2024. As per the energy intelligence firm Kpler, India imported more than 2,54,000 barrels per day (b/d) in January 2024 and over 1,91,000 b/d in December 2023 from Venezuela. According to reports, after easing the sanctions, Reliance Industries (RIL) is back in the market for Venezuelan oil that is likely available at a discounted price.

Officials of OVL maintain not getting oil from Venezuela post-lifting the sanctions. “ONGC Videsh has not received any oil after lifting the sanctions,” said the official.

As per OPEC’s monthly oil market report for April 2024, Venezuela produced crude 804 thousand barrels per day (tb/d) in January 2024, 822 (tb/d) in February 2024, and 809 tb/d in March 2024. In February 2024, Rajarshi Gupta, managing director of OVL, said he is in talks with the Venezuelan government to gain proprietorship of two of its projects in Venezuela.

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