ONGC Videsh’s (OVL) stalled Venezuelan oil and gas assets are set for a turnaround following US regulatory clearance for the company to restart operations. The relief coincides with fresh hydrocarbon reforms introduced by Caracas, which allow private companies to invest directly in the country’s energy sector.
Sources said that OVL currently is in talks with the Venezuelan government and the national oil company Petróleos de Venezuela (PDVSA), on issues such as resuming operations, rebuilding oil infrastructure through investments and how to utilise stuck dividends of around $500 million. OVL has stake in two oil fields in Venezuela — San Cristobal and Carabobo-1.
These issues are likely to be finalised by November 2026. Last month, ONGC said that it got the licence authorisation from the US Office of Foreign Assets Control (OFAC) for oil and gas operations in Venezuela in July. Now, the framework agreements for further course of action in both the oil fields are under discussion with relevant stakeholders.
Besides, Venezuela published the amendments to the Organic Hydrocarbons Law during the same month that introduces new contractual frameworks. The latest norms focus on enhancing recovery and improving crude oil production, said a source.
It also encourages investments across the value chain, including upgrading, refining, transportation, storage and supporting infrastructure, a possible first since 1976 allowing private investors to enter primary oil and gas activities. For international companies such as OVL, this offers potential opportunities beyond traditional upstream activities, including infrastructure, technology, services and downstream integration.
The regulations introduce a streamlined fiscal procedure, which includes a royalty ceiling and simplified integrated hydrocarbons tax cap replacing the earlier multi-layered tax mechanism.
New framework
Sources said that OVL is now in deliberations with the Venezuelan government and the PDVSA over how this new contractual framework can be operationalised.
The issue of stuck discounts is also being negotiated in terms of whether it can be paid in cash or compensated via crude oil supplies. This is also likely to be resolved by the time this new contractual framework is finalised, explained one of the sources.
Homayoun Falakshahi, Senior Commodity Analyst at Kpler, in a recent commentary on Venezuela reportedly weighing to exit OPEC said the country’s production recovery argues for patience: although output has significantly risen year to date, it is only back to around 1.3 million barrels per day (mb/d) and guided toward around 1.4 mb/d by late-2027. 2027 could see a flurry of deals signed, but the larger impact on production capacity won’t be seen before the end of the decade.
He emphasised that Venezuela’s reshuffling of oil flows matters more right now than the OPEC membership question.
“Independent of any OPEC decision, Venezuelan barrels are already reintegrating into global markets on distinctly US-aligned terms: exports to the US hit above 700,000 b/d in July; India has returned as a major offtaker of Merey and Boscan grades; ARA (Amsterdam-Rotterdam-Antwerp) took its first Venezuelan cargo in seven years; and Curaçao’s Bullenbay terminal is back in service under the Trafigura/Vitol-linked US marketing programme,” he added.