Previously, India was a significant importer of Venezuelan heavy crude, bringing in over 400,000 barrels per day at its peak until comprehensive US sanctions and rising compliance challenges halted purchases in 2020.
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India’s leading overseas producer, ONGC Videsh Ltd (OVL), jointly manages the San Cristobal oilfield in eastern Venezuela, but production levels have severely dropped due to US restrictions that have limited access to essential technology, equipment, and services — rendering commercially viable reserves effectively stranded.
Venezuela has not settled OVL’s USD 536 million in dividends due on its 40% stake in the field up until 2014, with a comparable amount for the following period remaining unpaid as Caracas has denied audits, effectively halting claim settlements.
Analysts and energy executives suggested that sanctions may be lifted following a significant US operation that ousted President Nicolas Maduro, placing the country’s vast oil reserves under American oversight.
Once sanctions are lifted, OVL could relocate rigs and equipment from locations such as its parent ONGC’s oil fields in Gujarat to San Cristobal to boost production that has plummeted to between 5,000 and 10,000 barrels per day, according to knowledgeable officials.
The onshore field has the capacity to produce between 80,000 and 100,000 bpd with additional wells and improved equipment, they indicated, noting that San Cristobal requires rigs akin to those in Gujarat, which ONGC owns in abundance.
US control of the Venezuelan oil sector would also enable a revival of exports to global markets, allowing OVL to recover its past USD 1 billion dues from San Cristobal via such revenues, the sources said.
In fact, OVL has sought a ‘specific licence’ sanctions waiver, similar to one granted by the Office of Foreign Assets Control (OFAC) to Chevron for operating the oilfield and exporting oil from it.
OVL and other Indian firms could also explore additional fields in Venezuela and reinvigorate production from the Carabobo-1 Area, another Venezuelan heavy oilfield of Indian interest. OVL has an 11% stake in Carabobo-1, while Indian Oil Corporation (IOC) and Oil India Ltd (OIL) each hold a 3.5% stake.
The Venezuelan national oil company, Petroleos de Venezuela SA (PdVSA), holds the majority of stakes in both San Cristobal and Carabobo-1.
Following the US intervention, analysts anticipate that PdVSA may face a restructuring. In a worst-case scenario, its stake could be transferred to a US company or a new entity established by Washington.
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OVL and other international companies — including Repsol of Spain, which holds an 11% stake in Carabobo-1 — are expected to continue their involvement in the projects with their shares, analysts suggested.
US President Donald Trump has already indicated that major US oil companies would return to Venezuela as part of the takeover, refurbishing the country’s severely degraded oil infrastructure, which holds the world’s largest oil reserves.
Analysts expressed that the US cannot fully replace all international companies and will need entities like OVL not only for their expertise but also for the market access they provide.
India stands to become a key purchaser of Venezuelan crude once the Latin American nation revives its oil industry with assistance from the US and other firms.
“If sanctions are lifted — similar to past geopolitical events, such as Panama in 1990 when aid and trade restrictions were quickly removed following the ousting of General Manuel Noriega — trade flows could resume swiftly. In such a scenario, Venezuelan barrels could return to Indian refineries,” noted Nikhil Dubey, Senior Research Analyst at Kpler, in a LinkedIn post.
Key Indian refiners like Reliance Industries, Nayara Energy (backed by Rosneft), IOC, HPCL-Mittal Energy, and Mangalore Refinery possess the necessary complexity to effectively process these grades in blends to create fuels like petrol and diesel.
“India is actively diversifying its crude sourcing — not only to lessen its dependence on Russian oil but also amid ongoing India-US trade discussions, where reducing exposure to Russian supplies remains a focal point. In this context, if sanctions on Venezuela are eased, Venezuelan crude could enhance flexibility for Indian refiners and mitigate supply concentration risks,” Dubey stated.
Before 2019, Venezuela exported 707 million barrels of crude oil annually, with the US consuming about 32% and China and India accounting for 35%. However, this figure has dropped to 352 million barrels per year, with China taking 45% and unspecified others 31%.
Kpler Risk & Compliance anticipates that US and allied authorities will prioritize asset freezes, criminal investigations, and dismantling evasive trading networks rather than easing restrictions immediately.
China, the main residual buyer for Venezuela, may halt its purchases until there is clarity regarding PdVSA’s authority and payment channels in the near future.
Regarding the US move, analysts noted that Trump aims to decouple the American economy from the global market. With Venezuelan oil under US control, the country would reduce its dependency on OPEC producers like Saudi Arabia and the UAE.
“In a sense, Trump is delivering a powerful message to Saudi Arabia. His rationale of claiming Venezuelan oil and asserting ownership resonates similarly with the Middle East. Historically, US firms discovered oil in Saudi Arabia and other regions, and as a corollary, it could extend its influence to Saudi Crown Prince Mohammed bin Salman Al Saud,” stated an analyst monitoring the sector.
With domestic oil and gas production and Venezuelan output, the US would no longer rely on any global region for its energy needs.
However, it continues to depend on China for non-energy commodities, with Trump attempting to mitigate this through tariffs and promoting local production, analysts noted.
For the oil market, the resumption of Venezuelan oil exports should introduce price stability, though Trump would prefer prices to remain above USD 60 per barrel to maintain the economic viability of US shale oil and gas production, another analyst commented.
“The best scenario for him would be to urge OPEC to cut production to accommodate Venezuelan oil flow into the market.” Venezuela possesses the world’s largest proven oil reserves — 303 billion barrels, exceeding Saudi Arabia’s 267 billion barrels — but its production has declined due to underinvestment, mismanagement, and sanctions.
A US-led modernization — bringing in capital, technology, and operational discipline — could significantly enhance production within a year, boosting global supply, analysts predict.
For India, the third-largest oil importer globally, renewed Venezuelan exports would provide a strategic alternative to Middle Eastern crude, lessen vulnerability to geopolitical disruptions, and strengthen its negotiating position in price talks.
“Indian refiners are structurally equipped for Venezuelan heavy crude,” remarked a former oil executive.
“Should production surge and payments normalize, trade could recommence almost immediately.” Geopolitically, a US-dominated oil sector in Venezuela would also diminish China’s influence, which currently enjoys preferential access to Venezuelan crude due to debt-repayment agreements. Any renegotiation of those terms could open opportunities for India to reclaim long-term supply contracts.
While legal conflicts and deteriorating infrastructure represent risks, analysts assert that these challenges are manageable within a US-supported framework.
