Trump Presidency May Expedite Recovery Of ONGC Videsh’s $1 Billion Stuck In Dividends

There is every possibility of a positive shift in stance once Donald Trump takes over as the next president of the US, especially towards putting a halt on Russia-Ukraine war and relaxation in US and European sanctions, including on Russia’s banking system, the people quoted above told NDTV Profit.

OVL has had around $600 million in dividends stuck in Venezuela and another close to $350 million in Russia for close to two years now.

It should be noted that OVL was in advanced discussions with US authorities seeking exemptions to operationalise its project in sanction-hit Venezuela that could have allowed the company to receive oil for dividends.

It also expected a directive from the Russian government to transfer its abandonment fund, paving way for dividend payments from the Sakhalin-I project. However, despite the passage of over six months since the company spoke to media in Delhi, there has been no progress on the requests.

People close to the development are very hopeful that there will be positive movement in controlling the unnecessary war mongering once Trump takes over. It will help OVL transfer its abandonment fund and receive dividends in Russia as well, they said.

There is every possibility of a positive shift in stance once Donald Trump takes over as the next president of the US, especially towards putting a halt on Russia-Ukraine war and relaxation in US and European sanctions, including on Russia’s banking system, the people quoted above told NDTV Profit.

OVL has had around $600 million in dividends stuck in Venezuela and another close to $350 million in Russia for close to two years now.

It should be noted that OVL was in advanced discussions with US authorities seeking exemptions to operationalise its project in sanction-hit Venezuela that could have allowed the company to receive oil for dividends.

It also expected a directive from the Russian government to transfer its abandonment fund, paving way for dividend payments from the Sakhalin-I project. However, despite the passage of over six months since the company spoke to media in Delhi, there has been no progress on the requests.

People close to the development are very hopeful that there will be positive movement in controlling the unnecessary war mongering once Trump takes over. It will help OVL transfer its abandonment fund and receive dividends in Russia as well, they said.

OVL has 40% stake in the San Cristobal project in Venezuela and its share of oil produced from the project was around 12,000 barrels per day, till the US government reimposed the sanction in April this year, after it was relaxed for six months in October 2023. Around $600 million in dividend was pending from the Cristobal project that could not be liquidated.

In August, the company had said it was in talks with US government officials to allow them operational and financial exemptions on the lines provided to US' Chevron Corp. But according to people close to the development, it is understood there has not been any progress on the applications.

OVL declined to comment on queries sent by NDTV Profit.

During ONGC's annual general meeting in August, OVL Chief Executive Officer and Managing Director, Rajarshi Gupta, had said, "We are in advanced stages of discussions with the US State Department and Office of Foreign Assets Control to receive a licence to exempt it from sanctions and work in Venezuela using US entities and the US dollar.”

“The licence would allow OVL to operationalise the project and help secure oil for dividends,” Gupta had said.

OFAC had granted exemption to US based Chevron Corp. to produce from its joint venture and export to the US. OVL was looking for similar exemptions since sanctions were reimposed.

ONGC Videsh was awaiting a directive from the Russian government for transfer of $600 million abandonment fund for the Sakhalin-1 project that would have formalised its stake in the block, after the exit of operator ExxonMobil.

OVL had requested a change in directive to transfer the fund in Rupee-Ruble mode, or by partly using its $250 million lying in the Russian accounts. However, the directive has still not come for the transfer of the fund, as Russian government is wary of using Rupee as a mode of transfer given the lopsided balance of trade. India has been importing around 40% of its crude oil from Russia and the payments are made in Rupee, while Russia has found it difficult to use the stock of Rupee at its disposal.

As far as the Sakhalin project is concerned, the Russian government had taken control of the project, after ExxonMobil unilaterally stopped production, following Russia’s invasion of Ukraine.

The 30% stake held by ExxonMobil and remainder by consortium partners, including OVL, IOCL and Bharat Petro Resources Ltd., was taken over by the Russian government. The Russian government created a new entity and transferred the respective stakes, making it contingent on partners to contribute to the abandonment funds to formalise their stakes.

Abandonment funds are created in advance to comply with rules related to closure of wells, after they reach full capacity and are abandoned.

The company had set up an abandonment fund in UK for the Sakhalin-1 project but after the breakout of Russia-Ukraine war, it was transferred to GIFT City in India, but could not be transferred to Russia due to several banking restrictions.