India tries afresh to recover $660 million from Venezuela

NEW DELHI: Amid growing international concern over the deteriorating economic and political situation in Venezuela, India on Tuesday began a fresh round of energy diplomacy to look for ways to recover millions of dollars in oil and pharma dues from the Latin American country.

Sources said oil minister Dharmendra Pradhan met Venezuelan ambassador Augusto Montiel to explore ways for clearing $660 million in accumulated dividend that the Venzuelan national oil firm — PdVSA — owes to ONGC Videsh, the overseas acquisition arm of flagship explorer ONGC, for oil produced from San Cristobal project.

ONGC Videsh had bought 40% stake in the Orinoco Heavy Belt project in 2008 and invested over $366 million.

Corporacion Venezolana del Petroleo, a unit of PdVSA, owns the remaining 60% stake. Petrolera IndoVenezolana SA, a joint venture with ONGC Videsh, operates the project in the Orinoco heavy oil belt.

ONGC Videsh was paid $56 million as dividend in 2008. PdVSA stopped payments since then as it ran into a cash crunch.

The rising dues have become an issue for the ONGC Videsh management, which is finding it tough to get board approval for another $300-400 million required to be invested in the field. In the meantime, production has fallen to about 28,000 bpd (barrels per day) from 30,000 bpd.

A consortium of Indian state-run oil firms under ONGC Videsh, however, is going ahead with developing the Carabobo project.

Venezuela is estimated to have one of the largest oil reserves in the world and Indian refiners, including private sector Reliance Industries, import about 22 million tonnes of oil from that country. The stunningly bold Honda Amaze is here Honda

Sources said one of the key options on the table at Pradhan's meeting with Montiel was to put some of the proceeds from oil sales in a separate account, akin to an escrow. ONGC Videsh could then use part of this fund to recoup its dues, providing some comfort for making fresh investments.

Also on the table was a suggestion for using oil to pay for Indian pharmaceuticals exports. Indian pharma companies such as Dr Reddy's, Sun Pharmaceutical and Glenmark are major exporters of medicines to Venezuela, which is facing severe shortage. Unpaid bills are estimated at over $110 million.

Oil revenue drives 97% of Venezuela's economy and depends on imports for most other things.