How Reliance Industries and ONGC may benefit from US takeover of Venezuelan oil

Reliance Industries and ONGC are seen as key Indian beneficiaries of a prospective US-led takeover and restructuring of Venezuela’s oil industry, with Jefferies arguing that both companies stand to gain in terms of supplies, cash flows and, over time, valuations if sanctions on Caracas are eased or lifted.

Jefferies notes that Venezuela holds about 18% of the world’s proven oil reserves but currently contributes less than 1% to global crude supply, with output below 1 million barrels per day. As a result, the latest geopolitical churn around a potential US takeover of Venezuelan oil assets is unlikely to materially alter crude prices in the near term, even if trade flows change.

The brokerage expects US majors to invest aggressively in Venezuelan fields once sanctions are relaxed, raising production through 2027–28 and potentially exerting downward pressure on crude prices unless OPEC+ responds with offsetting cuts.


For Reliance, the core thesis rests on access to heavily discounted Venezuelan crude that its Jamnagar complex is technically equipped to process. Venezuelan crude is heavy, sour, and acidic. Globally, only a limited set of complex refineries can handle it, which historically forced the grade to trade at a discount of around $5-8 a barrel to Brent, Jefferies points out.

Reliance had tied up with PDVSA in 2012 to source roughly 20% of its daily crude requirements from Venezuela, a deal terminated after US sanctions tightened in 2019. With Washington now indicating it would sell Venezuelan crude to global buyers, Jefferies believes Reliance could again secure long-term volumes at a discount, supporting gross refining margins and cash generation at a time when the stock already trades at about 27 times FY24 earnings and 14.7 times EV/EBITDA.

ONGC’s dividend dues and project unlock

For ONGC, the brokerage highlights a more direct balance sheet catalyst: recovery of long-pending dividends from its Venezuela ventures. ONGC has not received its share of dividends from production at the San Cristobal field, with unpaid dues now estimated at over $500 million, according to Jefferies.

If a US-led restructuring allows cash repatriation, ONGC could claw back this amount and also revive development of the Carabobo asset in the Orinoco Belt, where it holds an 11% equity stake.

This would come on top of consolidated net profits of about Rs 571 billion in FY24 and a free cash flow to firm yield of 15%, reinforcing Jefferies’ view that the stock’s sub-1x FY24 price-to-book multiple leaves room for re-rating.

Jefferies stresses that any lifting of US sanctions is likely to have an “insignificant” near-term impact on global crude prices, given Venezuela’s currently depressed output. The bigger macro story, in the firm’s view, is a medium-term supply response as US oil majors invest and lift Venezuelan production, which could soften prices into 2027–28 if not offset by OPEC+.

Against this backdrop, Jefferies reiterates ‘Buy’ ratings on both Reliance and ONGC, with target prices of Rs 1,785 and Rs 310, respectively, implying 12% upside for Reliance and 28% upside for ONGC from their last close. Key risks flagged include weaker-than-expected refining and petrochemical margins or higher cash burn in Reliance’s new energy and e-commerce bets, and, for ONGC, lower Brent prices, weaker crude and gas realisations, or production disappointments at KG 98/2.