KOLKATA (miningweekly.com) - Overseas arm of Indian national oil exploration and production (E&P) major ONGC Limited, ONGC Videsh’s hopes of recovering $450-million of past dues has receded into uncertainty.
ONGC Videsh holds a 40% stake in the San Cristobel oilfields, in Venezuela, but is yet to receive a dividend payout from Venezuela national Petroleos De Venezuela (PDVA), which holds the balance of the oilfield. Furthermore, ONGC has also not received oil shipments in lieu of the defaulted dividends as agreed between the two parties last year, officials here said.
The officials said that following the agreement signed in November 2017, ONGC Videsh received only two installments of dividend payments, with neither further payment or oil consignments forthcoming to make up the $450-million due.
It was pointed out that the agreement between ONGC Videsh and PDVA linked clearing of all past dues to further investments by the former in San Cristobel, but with dues on the verge of being written off and no oil shipments in sight, such investment plans were expected to ‘die a natural death’ and production from the asset, earlier pegged at 18 000 bbl/d, unlikely to ramp up.
Simultaneously, ONGC Videsh’s existing investment in the asset would also fall into a limbo since there was no exit route available for the Indian company, as there did not exist any potential buyer in view of US sanctions against the Latin American country.
According to reports, PDVA has not executed any crude oil shipment contracts since April 2018 and an estimated 24-million tonnes of crude is stuck at loading ports in Venezuela, and the national oil company is likely to default in future supply contracts as it is unable to clear backlog shipments.
With ONGC Videsh’s San Cristobel investments turning into a non-performing asset, it has also put a cloud over its 11% stake in the Carabobo asset, also in Venezuela, which was at preproduction stage.
However, without any returns received from San Cristobel and with the possibility of attracting penalties for violating US sanctions against Venezuela, ONGC Videsh is unlikely to commit any further investments in Carabobo to take the project from preproduction to the envisaged 400 000 bbl/d production target, the officials said.