A potential US-led takeover or restructuring of Venezuela’s oil industry could bring tangible gains for India, particularly by unlocking nearly one billion dollars in long-pending payments and reviving crude output from oilfields operated by Indian companies in the sanctions-hit Latin American nation. Analysts and industry sources say such a development could reverse years of financial and operational stagnation caused by international restrictions.
India was once among the largest buyers and processors of Venezuelan heavy crude, importing over 400,000 barrels per day at its peak. This trade came to an abrupt halt in 2020 after sweeping US sanctions and heightened compliance risks forced Indian refiners to discontinue purchases, cutting off a key source of discounted crude well-suited to India’s complex refining infrastructure.
ONGC Videsh Ltd (OVL), India’s flagship overseas exploration and production arm, jointly operates the San Cristobal oilfield in eastern Venezuela. However, production at the field has been sharply curtailed over the years as US sanctions restricted access to vital technology, drilling rigs, equipment, and oilfield services, leaving commercially viable reserves effectively stranded despite their long-term potential.
Venezuela has also failed to pay OVL dividends amounting to USD 536 million for its 40 per cent stake in the San Cristobal field up to 2014. A similar amount is due for the subsequent period, but settlement has been stalled because Caracas has not allowed audits for those years, effectively freezing close to USD 1 billion owed to the Indian firm.
Energy analysts believe these constraints could ease following the dramatic US operation that removed President Nicolas Maduro and placed Venezuela’s vast oil resources under American oversight. If sanctions are relaxed, OVL would be able to mobilise drilling rigs and equipment, including those from ONGC’s domestic fields in Gujarat, to restart operations at San Cristobal and significantly lift output.
Industry officials familiar with the field say current production has fallen to just 5,000–10,000 barrels per day, far below its potential. With adequate investment, modern equipment, and additional wells, San Cristobal alone could produce between 80,000 and 100,000 barrels per day. ONGC already owns rigs of the type required, making a rapid operational ramp-up feasible once restrictions are lifted.
A US-controlled or restructured Venezuelan oil sector would also pave the way for exports to resume, allowing OVL to recover its accumulated dues directly from oil revenues. In the past, OVL had sought a specific sanctions waiver similar to the licence granted to Chevron, which allowed limited operations and exports despite broader restrictions.
Beyond San Cristobal, Indian companies could expand their footprint in Venezuela by reviving production at the Carabobo-1 heavy oil project. OVL holds an 11 per cent stake in this field, while Indian Oil Corporation and Oil India each own 3.5 per cent. Venezuela’s national oil company, PDVSA, remains the majority stakeholder in both projects.
Analysts say PDVSA itself may undergo restructuring following US intervention. In a worst-case scenario, its stakes could be transferred to a US firm or a new entity backed by Washington. Even then, international partners such as OVL and other foreign companies are expected to retain their equity and operational roles, given their technical expertise and strategic value.
The US has already indicated that major American oil companies will return to Venezuela to rehabilitate its severely degraded oil infrastructure. However, analysts argue that Washington cannot replace all international partners and will continue to rely on companies like OVL, not only for operational know-how but also for access to large and reliable end markets such as India.
Once Venezuelan exports resume, India is expected to re-emerge as a key buyer of its heavy crude. Indian refiners, including those with highly complex configurations, are well-equipped to process Venezuelan grades efficiently, blending them to produce petrol, diesel, and other fuels at competitive margins.
Market experts note that if sanctions are eased, trade flows could resume quickly, as seen in past geopolitical episodes where restrictions were lifted soon after regime changes. Under such conditions, Venezuelan crude could return to Indian refineries with minimal delay, restoring a mutually beneficial energy relationship.
From a strategic perspective, renewed access to Venezuelan oil would also help India diversify its crude basket. This is particularly relevant as India seeks to reduce overdependence on any single supplier and manage geopolitical risks, while also navigating ongoing trade discussions with the United States.
Before sanctions tightened, Venezuela exported over 700 million barrels of crude annually, with significant volumes going to the US, China, and India. By 2025, exports had fallen sharply due to underinvestment and restrictions, with China emerging as the dominant buyer through debt-repayment arrangements. A US-backed restructuring could rebalance these flows and open space for India to regain long-term supply contracts.
Analysts also believe that a revival of Venezuelan oil production would contribute to greater stability in global oil markets. While additional supply could ease price pressures, it is expected to be managed in a way that avoids undermining the economics of US shale production, possibly through coordination with other major producers.
Venezuela holds the world’s largest proven oil reserves, yet years of mismanagement, underinvestment, and sanctions have crippled output. A US-directed overhaul that brings in capital, technology, and operational discipline could lift production significantly within a year, adding meaningful supply to global markets.
For India, the implications are substantial. Recovering long-pending dues, restarting overseas oil assets, and regaining access to discounted heavy crude would strengthen energy security, improve the balance sheets of Indian oil companies, and enhance India’s negotiating leverage in global energy markets. While legal disputes and infrastructure decay remain risks, analysts say these challenges are manageable within a US-backed framework.
