ONGC Videsh seeks US exemption for its oil-for-dividends Venezuela plan

OVL owns 49% stake in Venezuela's operational San Cristobal project and 11% in under-development Carabobo. Petróleos de Venezuela, S.A., (PdVSA) which operates both, had agreed to give oil to OVL instead of cash dividends; however, this is held up since US sanctions bar transactions involving PdVSA.

OVL, a subsidiary of ONGC, has now reached out to the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury seeking an exemption, the people cited above said.

Exemption sought

"OVL has sought exemption from OFAC under GL44A for the same and is awaiting suitable response from the US authorities," an OVL spokesperson confirmed in an email response to a query from Mint. The General License No. 44A (GL44A) that OFAC issued on 17 April prohibited transactions with PdVSA, or any entity it owns or has a majority stake.

Also read | OVL looking to operate oil projects in Venezuela after US lifts sanctions

In January, Mint had reported that OVL was in talks with PdVSA for the oil cargoes. However, the return of US sanctions to Venezuela in April after a six-month breather threw India's oil-for-dividends plan with the Latin American country into disarray. On 20 April, Mint reported ONGC Videsh Ltd is looking for new options to get the promised oil cargoes.

Also read | As sanctions return to Venezuela, OVL has a problem on its hands

"Venezuela will be able to give us oil. We would have to show clearance from the US. Although their production has reduced, it has not stopped," said one of the two people cited above.

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The US, which had briefly lifted sanctions on Venezuela in October, reimposed them in April citing Venezuelan president Nicolas Maduro's alleged failure to hold free and fair elections. On Monday, Maduro was declared as the winner of the presidential elections for a third time, a result which was disputed by the opposition and several neighbouring countries.

In response to a query from Mint, the US embassy spokesperson said: "As a matter of course, we do not comment on individual waiver requests."

More investment planned

While the sanctions waiver was on, OVL managing director Rajarshi Gupta had in February said that the company would look at investing more in the country to increase productivity.

“The lifting of the sanctions is a very positive sign. We are in very advanced discussions with the government of Venezuela to get further cargoes to liquidate our dividends, and at the same time to get the operatorship of the two projects that we have there and increase production from there. The two projects we will have to invest to get more production. That’s still being worked out. We will have to invest, because Venezuela has the largest reserves in the world. So, if we invest more, we will get more production," he had told reporters.

Currently, OVL and PdVSA jointly operate the projects. OVL acquired 40% in San Cristobal project in Venezuela in 2008, with PdVSA owning the balance 60%. ONGC Videsh holds the stake through ONGC Nile Ganga (San Cristobal) BV, a wholly owned subsidiary of ONGC Nile Ganga B.V.

Last week, Bloomberg reported that Reliance Industries has obtained approval from the US to resume oil imports from Venezuela.