OVL seeks waiver of US sanctions on Venezuela to recover dividends

ONGC Videsh has approached the Biden administration for a waiver from US sanctions on Venezuela so that the company can recover its pidends of more than $400 million stuck for years in the South American nation.

ONGC has investments in two Venezuelan oil fields – Sancristobal and Carabobo-1 – but has been unable to receive its share of income for years, first due to enduring financial troubles in the Latin American country and then the imposition of the US sanctions that blocked oil trade and payment channels.


Out of the $594 million of declared pidends from the Venezuelan oil fields, $56 million was received on time and $538 million remained outstanding until 2015, according to people familiar with the matter. Following long-drawn negotiations, Venezuela permitted ONGC Videsh (OVL) to take oil in lieu of the pidend, which helped the company recover $125 million but the balance was again stuck after the US sanctions came into force in January 2019. A total of $413 million remain outstanding to date, as per the people cited above.

“We have approached the US administration for a waiver so that we can get our pidend, which is for the years before the sanctions were imposed,” ONGC Videsh managing director Alok K Gupta told ET.

The US has given a waiver to Chevron, Schlumberger, Halliburton, Baker Hughes, and Weatherford, permitting them to operate in Venezuela with certain restrictions. ONGC’s argument is that since its pidends are for the years before 2015 when sanctions were not in place, the US should permit the company to get back its dues. If the waiver is granted, the pidend will likely come in the form of oil shipments, which ONGC can sell on the market to realize its dues.

Even before the sanctions, Venezuela’s reluctance to pay pidends had stalled investments in the two fields, hitting their production. ONGC Videsh owns a 40% stake in San Cristobal and 11% in Carabobo-1.

In 2015, the two parties had discussed a plan under which Venezuela could have paid all the pidends in a year while ONGC would have arranged a billion-dollar in credit for investment in the San Cristobal project. The plan never took off.

Venezuela, which has the world’s largest proven reserves of crude oil, has seen its production sink to multi-decade low following years of underinvestment. The US sanctions, aimed at choking oil revenues, the lifeblood of Venezuela’s economy, have further squeezed investments in Venezuelan oilfields.