ONGC Videsh Limited (OVL) is in an advanced stage of discussions with the United States, Venezuela, and Russia to take back control of its stuck projects in Venezuela and Russia, the company’s senior management said on Friday.
The overseas arm of domestic state-owned exploration and production company ONGC, OVL has applied for a specific licence from the US authorities to get back operatorship of its projects in sanctions-hit Venezuela. It is also seeking to pay Russia for its share of a key fund in Russian roubles to take back control of the Sakhalin-1 field.
“We are in advanced stages of discussions with the US State Department and Office of Foreign Assets Control (OFAC) to receive a licence to exempt it from sanctions and work in Venezuela using US entities and the US dollar,” OVL managing director and chief executive officer Rajarshi Gupta said.
He was speaking at a press conference after ONGC held its annual general meeting here.
OVL had acquired a 40 per cent stake in the San Cristobal Field in Venezuela in 2008. Venezuelan state-owned PDVSA holds the remaining stake. OVL has said its dividends of about $600 million from the project are owed to it.
The United States had eased sanctions on Venezuela’s oil sector in October 2023. The sanctions were reimposed in April this year.
Russian dividends
US sanctions-led banking restrictions on Moscow have also hamstrung OVL’s efforts to pay its share of the abandonment fund of Russia’s Sakhalin-1 field due to banking restrictions. This has obstructed the company’s path to regain a 20 per cent share in the oilfield.
“The initial directive was that the fund had to be paid in US dollars. We have requested that to be changed into Russian roubles,” Gupta said. Abandonment funds are used to operate or abandon a well or facility that is non-compliant with the rules where the licensee or permittee of the well or facility fails to comply.
Inability to pay the fund had stopped Russia from transferring the project’s shares to OVL, Gupta said. As a result, dividends worth upwards of $630 million remain stuck in Russia.
OVL works with its Japanese partners from both the public and private sectors, which collectively own 30 per cent in Sakhalin-1. American multinational oil giant Exxon owns a further 30 per cent in Sakhalin-1, but announced last year that it is pulling out of the project despite booking a reported loss running into the billions.
OVL is also making headway in its gas project in Mozambique, where people have begun working on the ground. “We expect the force majeure to be officially lifted in the last quarter of the current financial year,” Gupta said.
BPRL Ventures Mozambique BV, an overseas subsidiary of Bharat Petro Resources Ltd, a wholly-owned subsidiary of BPCL, holds 10 per cent participating interest in the Area 1 concession. OVL has a 16 per cent interest while Oil India holds 4 per cent interest.
OVL is present in 18 nations.
First Published: Aug 30 2024 | 10:03 PM IST
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