KOLKATA (miningweekly.com) – Despite a default on sovereign debt by Venezuela, Indian oil and gas major ONGC has clarified in a statement that it will continue implementation of the San Cristobel oilfield project, in the politically and economically embattled Latin American country.

ONGC said this week that the November 2016 agreement with Venezuelan national oil company, Petreos de Venezuela SA (PDVSA), remained in place and that all provisions to implement ongoing projects would continue.

A high-level delegation of ONGC Videsh, the overseas arm of ONGC, held meetings with the Venezuelan Petroleum Minister and the PDVSA CEO last week, wherein both sides reiterated intent to comply with the 2016 agreement. The meeting also confirmed that all payments would be honoured through existing channels or through new agreements between the government-owned refineries, and that ONGC investments in Venezuela would be protected.

ONGC said that PDVSA had already paid $88-million out of the total $537-million outstanding due on account of dividends.

For the record, OVL through the 2016 agreement, had picked up a 40% equity stake in San Cristobel oilfield project by investing about $200-million.

At the meeting between the two national oil companies last week, it was decided that PDVSA would repay the balance of $449-million through export of crude oil to Indian refineries. However, this would require new crude supply agreements between PDVSA and Indian government-run refiners.

To enable it to offset outstanding debt through crude oil supplies, ONGC has proposed that production from San Cristobel be increased to 27 000 bbl/d from 18 000 bbl/d.

However, as things stand now, only private Indian refiners, like Reliance Industries and Essar, import Venezuelan crude, while large government run refineries such as Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation did not.

Hence, there is no clarity yet on whether the Indian government refiners will enter into new crude purchase agreement with PDVSA to liquidate the latter’s $449-million debt.