ONGC to invest $500 million in Venezuelan JV
OVL (ONGC Videsh Limited), the overseas wing of state-run Oil and Natural Gas Corporation, is likely to arrive at an agreement with Venezuela's Petróleos de Venezuela, SA (PDVSA) to invest around $500 million in their San Cristobal Joint Venture. The investment would be used to increase production at San Cristobal oilfield. OVL and CVP share the San Cristobal oil field in a 40:60 ratio.
Oil and Natural Gas Corporation (ONGC) is a public sector undertaking of the Government of India which deals with oil and gas. Headquartered in Dehradun, Uttarakhand, the company was established in 1956. ONGC, which had discovered 6 of the 7 producing basins of India, accounts for 70% of India's oil and 50% of India's gas production. It produces 1.27million barrels of oil equivalent daily.
ONGC Videsh Limited is a subsidiary of ONGC which is responsible for prospecting oil and gas outside India to meet India's energy needs. OVL has stakes in 33 oil and gas projects in 16 countries.
Venezuela is a South American country which has the largest oil reserves in the world. PDVSA (Petróleos de Venezuela, S.A.) is a Venezuelan government-owned oil and natural gas company involved in exploration, production, refining and exporting of oil. PDVSA's subsidiary- Corporación Venezolana de Petróleo (CVP)- owns 60% stake in the San Cristobal oil fields joint venture with ONGC Videsh Limited.
ONGC Videsh Limited's partnership with PDVSA began when OVL had invested $190 million in 2008 in the San Cristobal joint venture project for a 40% stake.
Investing in the San Cristobal oil field will help increase oil production in the field which has fallen from 38,000 barrels a day to 28,000 barrels a day. It will also help revive the oil-dominated Venezuelan economy which is reeling under an economic crisis due to falling crude prices. For India, it will help reduce crude oil dependence on conflict-ridden gulf countries.
According to Bloomberg, India has already surpassed the US and China to become the largest destination for Venezuelan crude oil exports.
