ONGC awaits US and Russian approvals to take control of oil fields in Venezuela and Sakhalin-1

As ONGC Videsh Ltd (OVL) expands its footprint worldwide for the exploration of oil and natural gas, the company is awaiting approvals from foreign governments to operationalise its role and investments.

OVL is in talks with the Russian, American and Venezuelan governments to recover pending dividends and seek control of the projects it is undertaking in different countries.

OVL is awaiting approval from the Office of Foreign Assets Control (OFAC) in the US Department of Treasury to take charge of the San Cristobal and Carabobo-1 oil projects in Venezuela.

Approval has been sought under the Chevron model, which was the first oil major allowed by the US to operate in the sanctions-hit country. OVL has sought approval for pending dividends worth $500 million from the oil fields which collectively produce 12,000 to 15,000 barrels of oil per day.

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Though the Venezuelan government is the majority stakeholder in the oil fields, an OFAC license will allow OVL to use American banking channels and US dollars for the project as well as increase oil output.

OVL is also awaiting the Russian government’s approval to regain a 20% share in the Sakhalin-1 oilfield by using Roubles to pay the abandonment fund. The fund is used to operate an oil well when a licensee fails to abide by the set regulations.

With payments to Russia facing American sanctions, India has been unable to pay the abandonment fund in dollars. India’s inability to pay in Roubles has kept it bereft of realizing dividends worth $630 million from the Sakhalin-1 oilfield. ONGC is also considering possibilities for the exploration of rare earths, provided it gets the right synergies.

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