ONGC could receive close to $500 million in long-pending dividends from its oil investments in Venezuela as shifting geopolitical dynamics revive hopes of payouts stalled for over a decade, global brokerage firm Jefferies said.
Market participants believe that a possible change in control of Venezuela’s oil sector, including a potential US role, could eventually lead to easing of sanctions on the country’s crude exports.
While US President Donald Trump has indicated that sanctions remain in force for now, any relaxation in the future could allow additional Venezuelan oil to enter global markets, potentially influencing crude prices.
Jefferies noted that ONGC is entitled to around $500 million in unpaid dividends from the San Cristobal oil project for the period up to 2014.
Dividend accruals ceased after production at the field was halted that year, leaving payments pending for more than a decade.
ONGC’s exposure to Venezuela is routed through its overseas arm, ONGC Videsh Limited (OVL), which holds a 40 per cent participating interest in the San Cristobal project.
Separately, OVL, along with Indian Oil Corporation and Oil India, owns an 11 per cent stake in the Carabobo-1 oil field in the South American nation.
The brokerage cautioned that while the near-term developments could be positive for ONGC, a revival of Venezuelan oil production poses a medium-term risk.
An increase in output from the country would add to global supply and could exert downward pressure on crude prices, affecting upstream oil producers.
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Commodity analysts, meanwhile, said the ongoing US-Venezuela tensions have injected a geopolitical risk premium into oil prices, even though the immediate impact on global supply remains limited.
Venezuela currently produces between 800,000 and 1.1 million barrels of oil per day, accounting for about one per cent of global output, according to Aamir Makda, Commodity and Currency Analyst at Choice Broking.
He added that while short-term supply disruptions are unlikely, any shift in control over Venezuela’s vast oil reserves could have significant implications for heavy crude pricing and long-term supply dynamics.
