Minister of Petroleum and Natural Gas HS Puri met with US officials to push ONGC Videsh’s (OVL) proposal to extract oil from two oil blocks in Venezuela.
Puri is currently in Houston (Texas) attending the Gastech exhibition.
“The Minister met with US officials to push the case of allowing OVL to resume operations in the crisis-ridden South American nation,” a senior government official said.
OVL’s proposal to extract oil from two blocks in Venezuela is pending with the Office of Foreign Assets Control (OFAC) of the US Department of Treasury. It is in advanced stages of consideration, the company’s Managing Director Rajarshi Gupta said last month.
US sanctions
OVL owns 49 per cent stake in Venezuela’s operational San Cristobal project and 11 per cent in Carabobo. Petróleos de Venezuela, SA, (PDVSA) which operates both, had agreed to give oil to OVL instead of cash dividends; however, this has been on hold since the US imposed sanctions barring transactions involving PDVSA.
“We are in discussion with Venezuela to take charge of operations of the two projects there in the new model, which we call the Chevron model. At the same time, we have been interacting with OFAC. They gave us some comfort that over some operations subject to pre-conditions. We have sought a specific licence to operate in Venezuela. That’s in the final stages of consideration as to the best of our understanding,” Gupta said in August.
Crude output
Currently, the crude production in the Venezuelan projects stands at 12,000-15,000 barrels per day, and it can be enhanced to 45,000-50,000 barrels per day in the next 2-3 years.
Venezuela’s Merey sells at a higher discount, but only a few refineries in India can process the heavy sour grade. Reliance Industries’ (RIL) refineries in Jamnagar and Indian Oil Corporation’s (IoCL) Paradip refinery are best suited to handle such grades.
The US EIA estimates Venezuela’s output can increase to around 9,00,000 b/d by end-2024. It exported 2,63,000 b/d in 2021, 4,42,000 b/d in 2022 and an estimated 6,21,000 b/d in 2023.
Venezuela’s share in India’s crude oil basket is low at 4-5 per cent. After the US eased sanctions on the South American country in October 2023, India started importing cargoes in December 2023. However, sanctions were re-imposed in April this year.