US move on Venezuela oil bond could unlock gains for India’s energy companies

New Delhi: The United States has authorised certain transactions related to Venezuela’s Petróleos de Venezuela SA (PDVSA) 2020 8.5% bond from 17 September 2026, a step that could ease financial dealings for Indian firms with long-standing ties to the South American country’s oil sector. Petróleos de Venezuela, S.A. (PDVSA) is the state-owned oil and gas company of Venezuela and conducts exploration, production, refining, marketing, transportation, and export of oil, along with natural gas activities.

The Office of Foreign Assets Control (OFAC) at the US Treasury issued General License 5Y on 3 August, further delaying the effectiveness of authorisations linked to the bond until that date. For years, successive general licences have postponed US persons’ ability to enforce bondholder rights over those shares, protecting the asset while broader sanctions remained in place.

ONGC Videsh Limited (OVL), the overseas arm of India’s state-owned Oil and Natural Gas Corporation, stands to benefit. OVL holds significant interests in two Venezuelan oil projects: a 40% stake in the San Cristóbal field through the joint venture Petrolera Indovenezolana SA, and an 11% participating interest in the Petrocarabobo (Carabobo-1) project alongside partners including Repsol and Indian Oil Corporation.

These investments, made more than a decade ago, have been severely constrained by US sanctions imposed during the Maduro era. OVL has reported hundreds of millions of dollars in unpaid dividends, estimates range from around $600 million to as high as $900 million in recent reports, that could not be repatriated because of restrictions on financial transactions involving PDVSA. Operations at the fields have also been limited, with production far below potential.

The latest licence forms part of a wider, gradual easing of Venezuela-related sanctions that began after the capture of former president Nicolás Maduro by US forces in January 2026 and the subsequent cooperation of the interim authorities under Delcy Rodríguez. Since then, OFAC has issued a series of general licences allowing established US entities broader dealings in Venezuelan-origin oil, diluents, and related services, while still keeping PDVSA itself under certain restrictions.

Easier access to PDVSA-related financial instruments could simplify residual payments, restructuring discussions, or new commercial arrangements once the September date arrives. Venezuela holds some of the world’s largest proven oil reserves, concentrated in the Orinoco Belt where OVL’s projects are located. For India, which relies heavily on imported crude, Venezuela offers potential diversification of supply and a chance to recover long-pending returns on capital already invested.