US move on Venezuela oil lifts Reliance Industries, ONGC prospects

Indian oil companies that have invested in oil exploration projects in Venezuela might also be able to recover stuck dividends, with the US operating Venezuela's oil assets

Indian oil majors, primarily Reliance Industries Ltd (RIL) and ONGC Ltd, could see a revival in business ties with Venezuela after the US pushed for control of the South American nation’s oil sector following the capture of its President Nicolas Maduro on Saturday.

 

Mukesh Ambani-led Reliance and state-run oil explorer ONGC stand to benefit from the possible US takeover of Venezuelan oil, which could lead to the lifting of sanctions on crude sales from Caracas, said Jefferies, a global investment banking and capital markets firm, in a note.

 

In 2012, Reliance agreed to buy about 20 per cent of its daily crude requirements from Venezuela’s state-owned oil company PDVSA. The arrangement was discontinued in 2019 after Venezuelan crude was hit by US sanctions.

 

“With the US announcing it would sell Venezuelan crude to global buyers, Reliance could ntie up supplies at a discount to Brent, which could aid its gross refining margins,” Jefferies said.

 

In early intraday trade on Monday, shares of Reliance rose about 1 per cent to a fresh 52-week high of ₹1,611.8 apiece, while ONGC shares gained more than 1 per cent. However, ONGC and RIL ended the session in the red, down 1.41 per cent and 0.96 per cent respectively.

 

Following Maduro’s capture, American President Donald Trump has said that US oil companies would take control of Venezuela’s crude production and “rebuild the oil infrastructure” of the country.

 

Venezuelan crude, which trades at a discount of $5 to $8 a barrel to Brent, can be processed at only a limited number of refineries globally because of its heavy and sour characteristics. Indian refineries such as Reliance’s Jamnagar complex, Nayara Energy’s Vadinar refinery and Indian Oil Corp’s Paradip refinery are configured to process Venezuelan crude.

 

“From a crude sourcing perspective, any recovery in Venezuelan exports would be positive for India, though the benefits would be uneven across the refining system,” said Sumit Ritolia, lead research analyst for refining and modelling at maritime intelligence firm Kpler. “A stabilisation of Venezuela’s oil sector would reintroduce a heavy crude supply option that is operationally compatible primarily with India’s most complex refineries.”

 

Indian oil companies that have invested in exploration projects in Venezuela may also be able to recover dividends stuck due to sanctions as the US moves to operate Venezuelan oil assets, experts said. ONGC Videsh Ltd, the overseas arm of India’s largest oil and gas producer, holds stakes in two Venezuelan oil fields -- San Cristobal and Carabobo-1.

 

Classified as an impairment by ONGC Videsh, dividends of more than $500 million from the San Cristobal project have been stalled because of sanctions, according to the company’s annual report. OVL acquired a 40 per cent participating interest in the project in 2008. It had made cumulative investments of $529.33 million in the San Cristobal oilfield and $240.66 million in the Carabobo-1 project as of March 31, 2025.

 

OVL holds an 11 per cent participating interest in Carabobo-1, an exploration project that has not seen significant development. Indian Oil Corp and Oil India Ltd each own a 3.5 per cent stake in the project. “Indian companies have invested in oil and gas blocks in Venezuela from where dividends are stalled due to sanctions, and development of these assets has not progressed,” said Prashant Vasisht, senior vice president and co-group head at ICRA. “If sanctions are lifted and operations of the oil industry normalise, recovery of dividends and progress on development of these blocks could be possible.”

 

Venezuela produces about 0.8 per cent of global crude output despite holding 18 per cent of the world’s oil reserves, reflecting years of underinvestment and infrastructure constraints. China and the US are currently the largest buyers of Venezuelan oil.