India Expresses Concern Over Venezuela's Political Turmoil
India's Stance on Venezuela's Situation
New Delhi, Jan 4: On Sunday, India voiced its serious concerns regarding the recent events unfolding in Venezuela, particularly following the US military operation that resulted in the capture of President Nicolas Maduro and the First Lady.
The Indian government is actively monitoring the situation and has reiterated its commitment to the welfare of the Venezuelan populace.
According to the Ministry of External Affairs (MEA), "The recent developments in Venezuela are alarming. We are keeping a close watch on the situation as it unfolds."
India has urged for a peaceful resolution to the ongoing issues to maintain regional stability.
"We reaffirm our support for the safety and well-being of the Venezuelan people and call on all parties to engage in dialogue to ensure peace and stability in the region," the MEA stated.
In the meantime, analysts suggest that the restructuring of Venezuela's oil sector under US guidance could potentially benefit India, possibly unlocking nearly USD 1 billion in overdue payments and facilitating the revival of crude production from fields operated by Indian companies in the sanctions-affected nation.
Historically, India was a significant importer of Venezuelan heavy crude, with imports exceeding 400,000 barrels per day at peak times, until US sanctions and compliance challenges halted purchases in 2020.
ONGC Videsh Ltd (OVL), India's leading overseas oil producer, operates the San Cristobal oilfield in eastern Venezuela, but production has drastically declined due to US restrictions that hinder access to essential technology and services, leaving valuable reserves stranded.
Venezuela has not paid OVL USD 536 million in dividends owed for its 40% stake in the field up to 2014, with a similar amount due for the following years, as Caracas has denied audit permissions, effectively freezing the settlement of these claims.
Analysts and energy executives believe that the recent US operation could lead to a relaxation of sanctions, allowing OVL to mobilize rigs and equipment from its parent company's fields in Gujarat to San Cristobal, where output has plummeted to between 5,000 and 10,000 barrels per day.
The San Cristobal field has the potential to produce between 80,000 and 100,000 barrels per day with improved equipment and additional wells, and OVL possesses rigs similar to those currently in operation in Gujarat.
With US oversight of Venezuela's oil sector, global exports could resume soon, enabling OVL to recover its past dues from San Cristobal through these revenues.
OVL has also requested a specific sanctions waiver, akin to the one granted to Chevron, to operate the oilfield and export oil.
Indian firms, including OVL, may also explore additional fields in Venezuela and enhance production in the Carabobo-1 area, where OVL holds an 11% stake, while Indian Oil Corporation (IOC) and Oil India Ltd (OIL) each hold a 3.5% stake.
US President Donald Trump has indicated that major American oil companies will return to Venezuela as part of the takeover, aiming to refurbish the country's deteriorating oil infrastructure.
Experts believe that the US will require the expertise and market access of firms like OVL, as it cannot replace all international companies.
Once Venezuela regains its footing with assistance from the US and other companies, India is expected to become a key buyer of Venezuelan crude.
"If sanctions are lifted, as seen in previous geopolitical scenarios like Panama in 1990, trade could resume swiftly. Under such conditions, Venezuelan oil could once again flow to Indian refineries," stated Nikhil Dubey, a Senior Research Analyst at Kpler, in a LinkedIn post.
Major Indian refiners, including Reliance Industries, Nayara Energy, IOC, HPCL-Mittal Energy, and Mangalore Refinery, possess the capability to efficiently process these grades into fuels such as petrol and diesel.
The resumption of Venezuelan oil exports is anticipated to stabilize prices in the oil market; however, Trump may prefer to keep prices above USD 60 per barrel to ensure the economic viability of US shale oil and gas production, according to another analyst.
Venezuela is home to the world's largest proven oil reserves, totaling 303 billion barrels, surpassing Saudi Arabia's 267 billion barrels, yet its output has plummeted due to underinvestment, mismanagement, and sanctions.
For India, the third-largest oil importer globally, renewed exports from Venezuela would provide a strategic alternative to Middle Eastern crude, mitigate exposure to geopolitical risks, and enhance its negotiating power in price discussions.
"Indian refiners are well-equipped for Venezuelan heavy crude. If production increases and payments normalize, trade could resume almost immediately," remarked a former oil executive.
While legal disputes and infrastructure deterioration present challenges, analysts believe these can be effectively managed within a US-supported framework.