To pay back ONGC Videsh, Venezuela’s PDUSA offers oil in lieu of cash

By: |
New Delhi | Published: November 16, 2017 5:47:25 AM

Venezuela’s state-owned PDVSA has offered to supply crude oil to India’s government-run petroleum refineries towards $449-million dividend it owes to ONGC Videsh (OVL).

PDVSA and ONGC aim to raise oil output from the project to about 27,000 bpd from 18,000 bpd. (Reuters)

Venezuela’s state-owned PDVSA has offered to supply crude oil to India’s government-run petroleum refineries towards $449-million dividend it owes to ONGC Videsh (OVL). “ONGC Videsh has been assured that PDVSA is committed to these agreements (with OVL) and payments will be made through the existing offtake channels or through new (crude supply) agreements with the government-owned refineries in India and investment of ONGC in Venezuela will be protected,” OVL said in an email reply to FE’s queries.

OVL invested $200 million in the San Cristobal field in 2009 to pick up a 40% stake. Under the agreements signed with OVL in November 2016, PDVSA has paid the latter an amount of $88 million as dividend out of an estimated $537 million and the outstanding amount as of now is about $449 million, OVL said. Venezuela is facing a financial crisis and finding it difficult to repay a $60-billion debt. It is feared that the crisis may
spill over to other countries as well and affect the global markets, and the European Union has put various sanctions on the country.

A high-level delegation from OVL held meetings with Eulogio Del Pino, Venezuela’s minister of petroleum, and Nelson Martinez, president of PDVSA, on November 9-10, for compliance with the agreements signed in November 2016. PDVSA and ONGC aim to raise oil output from the project to about 27,000 bpd from 18,000 bpd. India’s trade with Venezuela has never been high. India’s exports to Venezuela fell from $258 million in 2014-15 to just $62.22 million in the last financial year, mostly on account of pharmaceutical products.

Also, imports from Venezuela (almost entirely oil) plunged from $13.94 billion in 2014-15 to just $5.51 billion last fiscal. This indicates India still has some leverage against the Latin American nation to clear the dues.
Indian generic pharma companies such as Dr Reddy’s and Glenmark are the others which may find it difficult to operate in the country and repatriate profits.

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