India's state-owned Oil and Natural Gas Corp. (ONGC) is negotiating to take over operations at two Venezuelan oil projects within six months, a step that would give the company control over production and sales at fields where it is owed more than $500 million in dividends.

ONGC's overseas arm, ONGC Videsh, is in advanced discussions with Venezuelan and U.S. authorities, and the company expects the agreements to be finalized within three to six months, finance chief Anupam Agarwal told analysts on Friday. U.S. sanctions imposed on Venezuela's oil sector in 2019 continue to govern the terms under which foreign companies can operate in the country.

ONGC currently holds stakes in the San Cristobal and Carabobo 1 projects but does not operate either one. Under the proposed arrangement, ONGC would run the fields and market their production, while also addressing the outstanding dividend payments.

At San Cristobal, ONGC holds a 40% interest, with Venezuela's state oil company PDVSA owning the remaining 60%. ONGC expects to secure full operatorship of the project.

At Carabobo 1, the arrangement would be shared with other investors: ONGC and other Indian companies hold a combined 18% stake, while Spain's Repsol owns 11%. For India, one of the world's largest crude oil importers, overseas equity stakes held by state-run companies are a longstanding element of its energy security strategy.

Agarwal said the proposed agreements could also allow ONGC to acquire interests in additional Venezuelan fields. Details of the dividend settlement have yet to be finalized.

The talks come as Venezuela works to restore an oil industry long constrained by underinvestment and operational problems. The country holds the world's largest proven oil reserves. Chevron has outlined more than $7 billion in Venezuelan investment over five years, while Eni and Repsol have secured expanded operating roles in the country.

Rystad Energy estimates Venezuela could produce 1.6 million barrels per day by 2028 and 1.8 million bpd by 2030, provided investment and oilfield services expand substantially.

Rebuilding that production capacity, however, remains a considerable challenge. Only two drilling rigs were active in the country as of August, according to Baker Hughes data cited by Rystad, far below the roughly 50 rigs that would be needed by 2028 to support the production forecast. How quickly rigs and services return will be an early measure of whether that trajectory holds, and for ONGC the finalized agreements are due to lay out how the outstanding dividends are settled and whether interests in additional fields follow.

Source: Julianne Geiger, OilPrice.com