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 Any increase in the production of oil from Venezuela by US companies has the potential of lowering crude prices in the international market, benefiting all countries, including India. However, analysts are of the view that there is still too much geopolitical uncertainty in the region for large investments to pour into the Latin American country. 

Unlike China, India is not a big importer of Venezuelan crude, which is heavy and tar-like, making it costly to refine into petrol, diesel, jet fuel, and LPG. Apart from the Reliance refinery in Jamnagar, most Indian refineries are not configured to process this crude.

However, India’s upstream oil major ONGC, through its subsidiary ONGC Videsh, has a 40 per cent participating stake in Venezuela's San Cristobal Project. Along with this, OVL, Indian Oil Corporation, and Oil India also have an 11 per cent share in the Carabobo-1 field.

A US takeover of Venezuela's oil industry could mean lifting of sanctions on Venezuelan crude sales.

This could lead to ONGC getting its $500 million of unpaid dividends from the San Cristobal field, which are due up to 2014. After 2014, production came to a halt, putting an end to the accrual of dividends. This resulted in the Venezuelan investment of the Indian oil major turning into an impaired asset.

Venezuela’s oil industry has contracted from a production level of over 3 million tonnes to around 1.4 million tonnes at present, due to neglect and international sanctions. This would require major investments over several years before production can increase dramatically, according to experts.

To boost output beyond the 1.4 million bpd level would be possible with a stable investment of $8-9 billion per year from 2026 to 2040, on top of ‘hold-flat’ capital requirements. Venezuelan crude oil production could then recover to 2 million bpd by 2032 and to 3 million bpd by 2040, the firm said in a report.

"While some of this investment can be financed organically by Venezuela’s national oil company PDVSA, at least $30-35 billion of international capital would need to be committed in the next 2-3 years to make a 3 million bpd-by-2040 scenario plausible," global consultancy Rystad Energy said.

In the late 1990s, US imports of Venezuelan crude reached almost 2m barrels of oil a day, more than half of the South American country’s output. At the end of last year, US imports from Venezuela were just 135,000 barrels a day.

Returning Venezuela’s crude production to 3m barrels of oil a day would require 16 years of work and investment totalling $185bn, according to figures from Rystad Energy.