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OVL conditions financing of Venezuelan oilfield on clearing past dues

Press Trust of India  |  New Delhi 

ONGC Videsh has conditioned arranging for finances for remediating and raising production at Venezuela's San Cristobal field on the cash-strapped Latin American nation clearing its past dues.

The firm's parent, state-owned and (ONGC) in a regulatory filing said has not paid OVL USD 449 million (about Rs 3,305 crore) of accrued for four years.

OVL has 40 per cent stake in the San Cristobal field, which produces around 18,000 barrels of per day. Venezuelan national oil company Petroleos De S.A. (PDVSA), which holds the remaining 60 per cent stake, has not paid the to Indian firm since 2009.

In response to comments sought by stock exchanges over a PTI story on stopping dividend payments to OVL, ONGC said Venezuela had in November 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.

"Though (OVL) received its dividend of USD 56.22 million for 2008, dividends for 2009 to 2013 totalling USD 537.63 million remained unpaid. The dividend for 2014 and onwards is yet to be declared by the shareholders," ONGC said in the filing.

OVL and PDVSA through their relevant subsidiaries signed two definitive agreements for facilitating redevelopment of the San Cristobal joint venture project in Venezuela on November 4, 2016.

"The agreements provide for a mechanism to liquidate OVL's outstanding dividends from the San Cristobal project (USD 537.63 million). So far PdVSA has paid USD 88.42 million in accordance with the dividend payment agreement signed in November 2016. The balance dividend to be paid is about USD 449 million," it said.

ONGC said further payment of USD 100 million in dividend is awaited.

Upon receipt of the dividend, "OVL shall make reasonable efforts to commence third-party financing of the joint venture to recover the balance dividend dues and remediate the project to increase the production," it added.

ONGC said the issue of pending dividend payment has been taken up through various high-level engagements with the of Venezuela as well as various echelons of PdVSA. In April, the Latin American nation assured commencement of dividend payment shortly.

OVL had received its dividend from the sale of 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.

After the November 2016 agreements, OVL received three instalments totalling USD 88.42 million between December 2016 and March 2017, but subsequent ones have stopped. In the November 2016 agreement, PDVSA had agreed to supply 17,000 barrels per day of 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 18,000 bpd.

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

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, June 13 2018. 12:21 IST