ONGC Videsh has used dividend proceeds held up in Russia to meet abandonment-fund obligations for the Sakhalin-1 project, helping it retain its 20% stake. The company is also negotiating greater operational control of two Venezuelan oil projects to revive production and recover unpaid earnings.
New Delhi, November 6 — State-owned Oil and Natural Gas Corporation (ONGC) has used dividend proceeds stuck in Russia to meet financial obligations related to the Sakhalin-1 oil project, while simultaneously seeking greater operational control of oil assets in Venezuela.
ONGC’s overseas investment arm, ONGC Videsh Ltd (OVL), and other Indian state-run companies had been unable to repatriate around $800 million in dividends from their Russian energy investments following Western sanctions imposed after Russia’s invasion of Ukraine in 2022.
ONGC retains 20% stake in Sakhalin-1
OVL used dividend proceeds from its Russian investments to meet its contribution to the abandonment fund of the Sakhalin-1 project.
The payment enabled the company to retain its 20% interest in Sakhalin-1.
An abandonment fund is used to finance the eventual decommissioning of oil and gas infrastructure, including the safe closure of wells and environmental restoration.
ONGC officials said during an earnings call that dividend proceeds from the Vankor project were deployed to meet the Sakhalin-1 abandonment-fund obligation.
The company said there is currently no outstanding dividend amount stuck in Russia.
ONGC eyes greater control in Venezuela
OVL is also negotiating new operating arrangements with Venezuela’s state-owned oil company PDVSA for its San Cristobal and PetroCarabobo projects.
The company expects to become the sole operator of San Cristobal and a joint operator of PetroCarabobo within the next three to six months, subject to completion of the proposed agreements.
The new arrangement would give OVL greater control over field operations, production, marketing and revenues.
OVL currently holds a 40% participating interest in San Cristobal through a joint venture with PDVSA and an 11% stake in PetroCarabobo in Venezuela’s Orinoco heavy-oil belt.
Years of economic turmoil, deteriorating oil infrastructure, political uncertainty and US sanctions have limited OVL’s ability to monetise these investments.
$500 million Venezuelan dividends outstanding
Around $500 million in historical dividends from Venezuela remain outstanding.
ONGC is examining whether these dues can be settled as part of the proposed new operating arrangements or through a separate agreement.
Under the proposed structure, OVL would gain offtake rights, allowing it to play a more direct role in producing and selling crude oil instead of depending on arrangements under which PDVSA has exercised operational control.
If concluded, the agreements could help ONGC revive production from its Venezuelan assets while improving its ability to recover earnings accumulated over several years.
