The dramatic US military intervention in Venezuela, culminating in the capture of President Nicolás Maduro, has thrown a major wild card for India's significant energy security interests and billions of dollars in stranded investments in the South American nation.
Billions in Investments and Unpaid Dividends Hang in the Balance
India's state-run energy giants have invested approximately $2.5 billion in Venezuela's oil sector, primarily before the country came under stiff US sanctions in 2020. These investments are now in a state of deep uncertainty. The turn of events in Caracas will directly determine the fate of these multi-billion dollar assets and an estimated $600 million in unpaid dividends owed to Indian companies.
ONGC Videsh Ltd (OVL), the overseas arm of Oil and Natural Gas Corporation, holds a critical 40% stake in Venezuela's San Cristobal oilfield, a partnership dating back to 2008. US sanctions had already severely squeezed production and blocked the repatriation of profits from this venture. Separately, a consortium of OVL, Indian Oil Corporation, and Oil India Ltd invested $2.2 billion in the Carabobo-1 project, which has also suffered due to the sanctions regime.
An official from a state-run firm with major stakes in Venezuela, speaking anonymously, acknowledged the volatility, stating, "An opening-up of the market may allow more supplies," but emphasized a cautious wait-and-watch approach.
Potential Gains Versus Immediate Risks for India
While a potential easing of US sanctions following the intervention could eventually restore India's access to the world's largest oil reserves and its stuck dividends, analysts caution against immediate optimism. Experts highlight three significant near-term risks: immediate oil market volatility, severe decay of Venezuela's energy infrastructure, and the country's crippling hyperinflation, estimated by PwC's Deepak Mahurkar to be between 200% and 600%.
Prashant Vasisht of ICRA Ltd noted a dual potential impact. "First, it may provide some support to prices in the short term due to immediate supply worries. However, in case there is a transition which is globally accepted, sanctions may be lifted, which would help India source from Venezuela," he said, adding that several Indian refineries are equipped to process Venezuela's heavy crude.
However, the immediate reality is one of negligible trade. According to the Global Trade Research Initiative (GTRI), India's imports from Venezuela plummeted to just $364.5 million in FY25, with crude oil accounting for $255.3 million. This marks an 81.3% collapse from $1.4 billion in crude imports in FY24.
Broader Impact on India's Economy and Oil Bill
The volatility holds major significance for India, which imports about 88% of its crude oil requirement. This oil forms roughly a quarter of the nation's total import bill. Economists note that every $1 increase in oil prices can inflate India's annual oil import bill by approximately ₹13,000 crore.
N.R. Bhanumurthy of the Madras School of Economics warned that instability in Venezuela will ripple through global commodity markets, affecting oil prices and foreign exchange rates, potentially widening India's current account deficit. "Further depreciation of rupee will impact both import and export," he stated.
The development adds to existing global supply concerns, with other major producers like Iran and Russia also under sanctions. It also echoes challenges faced by Indian PSUs in other regions, such as issues with dividends from Russian oil fields.
Despite the long-term hope for access, the combination of years of sanctions-induced decay and the sudden political upheaval has created a vacuum. The immediate future for India's investments is overshadowed by humanitarian crisis and infrastructural challenges that will hinder Venezuela's ability to export oil reliably, keeping the fate of India's $2.5 billion stake in limbo.
