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Venezuela Offers Oil Stake to India’s ONGC
Venezuela Offers Oil Stake to India’s ONGC

Venezuela Offers Oil Stake to India’s ONGC

Venezuela Offers Oil Stake to India’s ONGC

Cash-hungry Venezuela has offered Indian oil company ONGC Videsh an increased stake in an oilfield, according to two sources close to the proposal, as the country seeks to shore up its bruised energy industry and strengthen ties with New Delhi.
State oil firm Petroleos de Venezuela SA has proposed selling a 9% stake in the San Cristobal field to ONGC Videsh, a subsidiary of India’s state-owned top explorer Oil and Natural Gas Corp, the sources said this week, Reuters reported.
ONGC Videsh already holds a 40% stake in the field, which produces around 22,000-23,000 barrels per day of oil. While the amount of the sale would be relatively modest, according to analysts, any extra income would be welcome for PDVSA.
Venezuela, struggling under triple-digit inflation and Soviet-style product shortages as its socialist economy unravels, has been hit hard by the falling price of oil, its economic lifeline.
The OPEC nation’s oil output has slipped and PDVSA is struggling to maintain investment in its oilfields, which hold the world’s largest crude reserves.
The state company already offered Russian oil major Rosneft a stake in a joint venture in an extra-heavy crude project in the Orinoco Belt, sources told Reuters in March.
The sources, who asked to remain anonymous because they are not authorized to speak about the negotiations, said PDVSA was still negotiating with ONGC and no deal was certain.
Under Venezuela’s hydrocarbon law, the state must maintain more than 50% of all oil ventures, hence PDVSA can only offer up to 9% to the Indian firm. “ONGC is still evaluating the options,” one of the sources said, adding the purchase could be challenging given the Indian company’s revenues are suffering due to lower oil prices.
Another potential complication is Venezuela’s murky legal framework during a power struggle between the opposition and the leftist government of President Nicolas Maduro.
A controversial decision by the Supreme Court in April gave the government the right to cut oil deals but the constitution mandates that the National Assembly, controlled by the opposition, must approve contracts of “national public interest”.

 

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