India’s state-owned Oil and Natural Gas Corporation (ONGC) plans to invest about $200 million to revive production at the San Cristobal oilfield in Venezuela, which it shares with Venezuelan state oil firm PDVSA, Indian outlet Economic Times reported on Wednesday, citing sources with knowledge of the development.
ONGC’s overseas unit ONGC Videsh Ltd (OVL) holds stakes in some Venezuelan oil projects, including a 40% interest in the San Cristobal oilfield, in which PDVSA owns the remaining 60%.
Earlier this month, ONGC secured a license from the U.S. Office of Foreign Assets Control (OFAC) to return to Venezuela.
India’s largest oil and gas company has a 40% stake in the San Cristobal oil project and an 11% stake in the Carabobo project but has been forced to curb activity significantly amid a barrage of U.S. sanctions on the South American country in recent years.
Now that the license has been secured, ONGC plans to develop the oilfield. The $200-million budget for reviving production at San Cristobal in the Orinoco Belt would be given the green light once the Indian firm and PDVSA sign an agreement on an investment plan.
The companies are close to finalizing said plan, according to ET’s sources.
The Indian firm will also cover PDVSA’s share of investment with the $200 million, and will recoup it through future production from the San Cristobal oilfield, the sources added.
ONGC’s investment over the next 12 months is aimed at boosting output at San Cristobal tenfold in the coming years.
The oilfield currently produces around 4,000-5,000 barrels per day (bpd) of crude oil. ONGC aims to ultimately restore output to the previous peak of up to 50,000 bpd, ET’s sources said. This level was achieved years ago, before the U.S. sanctions, years of mismanagement, and a lack of investment crippled production in the world’s biggest holder of crude oil reserves.
By Charles Kennedy for Oilprice.com
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