Reliance Industries, ONGC Shares In Focus As Jefferies Flags Benefits From Venezuela Oil Developments

Indian energy stocks are back in focus after Jefferies on Monday highlighted potential benefits for Reliance Industries Ltd. and ONGC from a possible US-led takeover or deeper involvement in Venezuela’s oil industry. While the brokerage expects the near-term impact on global crude prices to be insignificant, it believes the strategic implications could be meaningful for select Indian companies over the medium to long term.

Venezuela holds nearly 18% of the world’s proven oil reserves, yet its current production is less than 1% of global crude output, at under one million barrels per day. Years of underinvestment, sanctions and operational challenges have severely constrained output.

Jefferies notes that the latest geopolitical developments are unlikely to materially alter global oil supply in the near term and therefore should not meaningfully move crude prices immediately.

However, the medium-term picture could look very different. Jefferies believes that if US oil majors step in to revive Venezuela’s oil industry, it could lead to a gradual ramp-up in production over the coming years. Such a revival would require significant capital expenditure and technological input, areas where US majors have a clear advantage. If Venezuelan output meaningfully increases, it could weigh on global crude prices in 2027–28, unless OPEC+ actively intervenes to balance the market.

For Reliance Industries, the potential lifting of US sanctions on Venezuelan crude could be a clear positive. Venezuelan crude is heavy, sour and acidic, making it difficult to process for most refineries globally. Reliance’s Jamnagar complex, however, is among the few globally equipped to handle such grades efficiently. Historically, Venezuelan crude traded at a discount of around $5–8 per barrel to Brent.

Jefferies points out that in 2012, Reliance had agreed to source roughly 20% of its daily crude requirement from Venezuela’s state-owned oil company PDVSA. This arrangement was discontinued after US sanctions were imposed in 2019.

If sanctions are lifted and Venezuelan crude is once again allowed into global markets, Reliance could re-establish supply tie-ups at attractive discounts. Such advantaged sourcing could directly support gross refining margins, particularly in a softer crude price environment.

ONGC also stands to benefit from a shift in Venezuela’s oil dynamics. Jefferies highlights that ONGC has not received dividends worth more than $500 million from its participation in the San Cristobal field, largely due to sanctions and payment restrictions. With the US potentially facilitating a restructuring of Venezuela’s oil sector, ONGC could recover these unpaid dividends.

Beyond dividend recovery, ONGC may also gain operational upside. The company holds an 11% equity stake in the Carabobo field located in Venezuela’s Orinoco belt, one of the world’s most resource-rich oil regions. A more stable investment environment and renewed international participation could allow ONGC to progress development plans that have remained stalled for years.