Mumbai: India was once among the largest processors of Venezuelan heavy crude, importing over 400,000 barrels per day at peak levels, before sweeping US sanctions and rising compliance risks halted purchases in 2020. The sanctions also severely affected operations of ONGC Videsh Ltd (OVL), which jointly operates the San Cristobal oilfield in eastern Venezuela.

Production at San Cristobal has fallen sharply to about 5,000–10,000 barrels per day as US restrictions blocked access to critical technology, equipment and services. Venezuela has also failed to pay OVL USD 536 million in dividends due on its 40 per cent stake up to 2014, with a near-equivalent amount pending for later years as audits were not permitted, effectively freezing settlement of claims close to USD 1 billion.

Analysts say sanctions could be eased following a dramatic US operation that removed President Nicolas Maduro and placed the country’s vast oil reserves under American oversight. Once restrictions are lifted, OVL could redeploy drilling rigs and equipment from ONGC’s fields in Gujarat to San Cristobal, potentially restoring output to 80,000–100,000 barrels per day with additional wells and modern equipment.

US control of Venezuela’s oil sector is expected to restart exports to global markets, enabling OVL to recover its past dues from export revenues. The Indian firm had earlier sought a sanctions waiver similar to the licence granted by the US Office of Foreign Assets Control to Chevron.

Indian companies could also expand operations in other Venezuelan assets, including the Carabobo-1 heavy oilfield, where OVL holds an 11 per cent stake alongside Indian Oil Corporation and Oil India Ltd. Venezuela’s national oil company Petroleos de Venezuela SA (PdVSA) remains the majority stakeholder, though analysts expect PdVSA to undergo restructuring, with the possibility of its stake being taken over by a US-backed entity.

US President Donald Trump has said major American oil companies would return to Venezuela to refurbish its degraded infrastructure. Analysts note that the US would still rely on international partners such as OVL for expertise and market access, making India a key future buyer of Venezuelan crude.

Major Indian refiners, including Reliance Industries, Nayara Energy, IOC, HPCL-Mittal Energy and Mangalore Refinery, are well equipped to process Venezuelan heavy grades. Before 2019, Venezuela exported 707 million barrels of crude annually, with India and China together accounting for about 35 per cent of shipments. By 2025, exports have fallen to 352 million barrels a year.

Market watchers such as Kpler Risk & Compliance caution that US and allied authorities may initially prioritise asset freezes and investigations before fully easing restrictions. China, currently Venezuela’s main buyer, is also expected to pause purchases until governance and payment mechanisms are clarified.

Analysts say the US strategy aims to reduce dependence on OPEC producers like Saudi Arabia and the United Arab Emirates, while stabilising global oil prices above USD 60 a barrel to protect US shale output.

Venezuela holds the world’s largest proven oil reserves at 303 billion barrels, but output has collapsed due to underinvestment, mismanagement and sanctions. A US-directed overhaul could significantly lift production within a year, adding supply to global markets.

For India, the world’s third-largest oil importer, renewed Venezuelan exports would provide a strategic alternative to Middle Eastern crude, reduce exposure to geopolitical shocks and strengthen its hand in price negotiations, while also diluting China’s leverage in Venezuela’s oil sector.