New Delhi, January 5 (IANS). India’s state oil company ONGC is likely to get $500 million dues due to the change of regime in Venezuela. This information was given in a brokerage report.
Global brokerage firm Jefferies said that due to the changing situation in Venezuela after the US attack, ONGC may get the outstanding dividend of $ 500 million stuck in the Venezuelan oil project.
Experts say that after US control over Venezuelan oil industry, the ban on Venezuelan crude exports may be lifted.
However, US President Donald Trump has said that the sanctions on Venezuelan oil exports will continue and if any relaxation is given in the future, the supply of crude oil will increase in the global markets and this will increase pressure on crude oil prices.
ONGC could benefit if conditions improve as the company stands to receive an outstanding dividend of about $500 million from the San Cristobal project for the period through 2014, the report said.
However, production at this field ceased after 2014, resulting in no dividends in subsequent years.
ONGC has stake in Venezuelan oil fields through its overseas unit ONGC Videsh Limited (OVL).
The company holds a 40 percent stake in the San Cristobal project in Venezuela.
Additionally, OVL, together with Indian Oil Corporation and Oil India, holds an 11 percent stake in the Carabobo-1 oil field.
Brokerage firm Jefferies warned that while there may be some positive aspects in the short term, a possible resurgence in oil production in Venezuela is a medium-term risk for ONGC.
Higher production from the country could increase global supply and put pressure on crude oil prices, which would hit upstream oil companies.
However, commodity experts believe the US-Venezuela conflict has added a geopolitical risk premium to oil prices, even if its immediate impact on global supply may be limited.
Venezuela currently produces 800,000 to 11 million barrels of oil a day, about one percent of global supply, according to Amir Makada, commodity and currency analyst at Choice Broking.
“While the immediate impact on global oil supply may be limited, a change in control over Venezuela’s vast oil reserves could have a serious impact on crude oil prices and long-term supply forecasts,” he said.
–IANS
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