ONGC awaits US and Russian approvals to take control of oil fields in Venezuela and Sakhalin-1

As ONGC Videsh Ltd (OVL) expands its presence across the globe for oil and natural gas exploration, the company is awaiting approvals from foreign governments to operationalize its role and investments.

OVL is in talks with the governments of Russia, the United States and Venezuela to recover outstanding dividends and seek control of the projects it is developing in different countries.

OVL is awaiting approval from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) to take over the San Cristóbal and Carabobo-1 oil projects in Venezuela.

Approval has been sought on the model of Chevron, which was the first major oil company allowed by the United States to operate in the sanctions-hit country. OVL has sought approval for $500 million of outstanding dividends from oil fields that together produce between 12,000 and 15,000 barrels of oil per day.

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Although the Venezuelan government is the majority shareholder in the oil fields, an OFAC license will allow OVL to use US banking channels and US dollars for the project, as well as increase oil production.

OVL is also awaiting approval from the Russian government to recover a 20% stake in the Sakhalin-1 oil field by paying in rubles from the abandonment fund. The fund is used to operate an oil well when a licensee fails to comply with established regulations.

As payments to Russia face US sanctions, India has been unable to pay the abandonment fund in dollars. India’s inability to pay in rubles has prevented it from getting dividends worth $630 million from the Sakhalin-1 oil field. ONGC is also considering possibilities for rare earth exploration, provided it gets the right synergies.

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