State-run Oil and Natural Gas Corporation (ONGC) is set to expand its presence in Venezuela after receiving a licence from the US Treasury’s Office of Foreign Assets Control (OFAC), easing the sanctions-related restrictions that had kept its operations in the country limited.The clearance gives ONGC more room to invest in its Venezuelan assets, increase oil production and pursue new agreements. The company is also exploring the possibility of taking over the operation of some projects currently managed by Venezuela’s state-owned oil company PDVSA.Anupam Agarwal, director-finance at ONGC, said the company can now pursue its Venezuelan investments with fewer constraints.“Now we have full freedom to work on the Venezuela project because earlier we were restricting our operations there because of the sanction-related risks. Those risks are behind us,” Agarwal said during an investor call following the company’s first-quarter earnings announcement.The licence could also help ONGC address financial issues linked to its Venezuelan assets. It will allow the company to handle project-related finances and could help it recover a pending dividend of more than $500 million.ONGC has been holding discussions with Venezuelan authorities and its joint-venture partners on its investments in the country. Agarwal said the company expects to make progress on new agreements and is also looking at taking over operatorship of some projects from PDVSA.For years, US sanctions on Venezuela’s oil sector had made it difficult for ONGC to carry out financial transactions, invest in its assets and expand its operations. The restrictions had therefore kept the company’s activities in the country limited despite its existing presence.Venezuela’s vast crude reserves continue to make it important to ONGC. The company said the country has around 303 billion barrels of proven crude oil reserves, the largest in the world. Production, however, has remained below potential after years of underinvestment, sanctions and operational challenges.Venezuela’s newly enacted petroleum law could provide further support for resource development by offering additional fiscal incentives.ONGC is particularly interested in shallow and onshore fields, where it has relevant experience from its operations in western India.“ONGC’s focus is on shallow, onshore fields in Venezuela, where it has relevant operating expertise from its domestic fields in Western India, including Mehsana and Ahmedabad,” Agarwal said.With the sanctions-related restrictions easing, ONGC is now looking to make greater use of that expertise in Venezuela.“We are very bullish for Venezuela,” Agarwal said, adding that ONGC expects new agreements and could potentially take over operatorship of some projects from PDVSA in the near term.
