Venezuela starts clearing OVL's USD 449 mn dues

Venezuela's state oil firm PDVSA has paid ONGC Videsh Ltd USD 32 million from crude oil it sold to Reliance Industries, as the first step towards clearing nearly half a billion dollars of dues it owes to the state-owned firm.

OVL Managing Director Narendra K Verma said Petroleos de Venezuela (PDVSA) had last month shipped a cargo of crude oil to Reliance Industries and the payment it realised from it has now been given to OVL.

"We hope this is this beginning of clearing our past dues is sustained and the mechanism continues," he said.

Venezuela has not paid OVL, the overseas investment arm of state-owned Oil and Natural Gas Corp (ONGC), USD 449 million of accrued dividend for four years. This dividend pertains to the San Cristobal field, where OVL has 40 per cent stake and PDVSA the remaining 60 per cent.

PDVSA had agreed to pay OVL once every quarter the proceeds it receives from selling crude oil to refiners.

"We hope they continue to make regular payments and all our dues are cleared," Verma said.

OVL holds 40 per cent in Venezuela's San Cristobal field, which produces about 17,000 barrels of oil per day.

OVL had received its dividend from the sale of crude oil produced from the field totalling USD 56.224 million for 2008. But dividends for 2009 to 2013 totalling USD 537.631 million remained unpaid due to cash flow difficulties being faced by PDVSA. No dividend was declared thereafter.

The Latin American nation on November 4, 2016, agreed to pay USD 537.63 million of dividend due for 2009 to 2013, in installments. In lieu, OVL agreed to help PDVSA arrange USD 318 million financing for the San Cristobal project.

OVL received USD 88.42 million in accordance with the dividend payment agreement signed in November 2016 and the balance dividend about USD 449 million was pending, he said, adding now PDVSA has given a further USD 32 million.

PDVSA, which faces the US and international court actions over pending debts, had recently begun paying some creditors, mostly in oil, to avoid asset seizures.

After the November 2016 agreement, OVL received three instalments totalling USD 88.42 million between December 2016 and March 2017, but subsequent ones have been stopped. In the agreement, PDVSA had agreed to supply 17,000 barrels per day of crude oil to repay USD 537 million that it owed to OVL.

As part of the agreement, OVL was to stand guarantee for the San Cristobal joint venture to raise USD 318 million capital required for raising production from the field to 27,000 bpd from current 17,000 bpd.

OVL also owns 11 per cent of the Carabobo project in the Orinoco region of Venezuela, which is in the pre-production stage. The project was to produce 4,00,000 barrels per day of oil and involved construction of a heavy crude upgrader that could turn Orinoco's tar-like oil into valuable synthetic crude.

The agreement for Carabobo was linked to the development of the upgrader after reaching the peak but the project is now producing about 22,000 bpd only.

OVL has asked PDVSA to delink the development of the upgrader with the project and give it a dividend so that some revenue could flow to it.