Venezuela has agreed to supply crude oil to India on a monthly basis over a two-year period to repay USD 537 million it owes to ONGC Videsh Ltd.
"PdVSA has agreed to give us a fixed volume of crude oil every month... The supplies have not yet started as the agreement is under finalisation," Oil and Natural Gas Corp (ONGC) Chairman and Managing Director and OVL Chairman Dinesh K Sarraf told reporters here.
The entire dues, he said, would be "squared off" in a couple of years.
OVL, the overseas arm of state-owned ONGC, owns 40 per cent of the San Cristobal field and had invested about USD 190 million in the project in 2008. State-run Petroleos de Venezuela S.A., or PDVSA, holds the remaining stake.
It has not been paid for its share of oil from the field for last few years.
San Cristobal project covers an area of 160.18 square kilometers in the Zuata Subdivision of proliferous Orinoco Heavy Oil belt in Venezuela. The field currently produces about 28,000 barrels a day, down from a peak of 38,000 bpd.
OVL had received its dividend from sale of crude oil produced from the field totaling USD 56.224 million for 2008. But dividends for 2009 to 2013 totalling USD 537.631 million remained unpaid due to cash flow difficulties being faced by PDVSA.
During 2015-16, OVL's share of crude oil production was 0.585 million tonnes as compared to 0.645 million tonnes during the previous fiscal. It's share of investment in the project was Rs 2,599.71 crore (USD 486.69 million) till March 31, 2016.
Since PdVSA is facing a cash crunch, OVL wanted its share of revenue from the field be paid in form of crude oil. The proposal has now been agreed to by the Venezuelan national oil company.
Venezuela, the cash-strapped OPEC member and holder of the world's biggest oil reserves, has been unable to pay foreign partners on some of its projects as revenues slumped along with crude prices and as funds were diverted to social programs and fuel subsidies.
The Latin American nation earns almost all of its export revenues from oil.
It is already repaying loans outstanding to China with crude and OVL was keen on a similar deal.
Venezuela is India's fourth largest source of crude oil, supplying some 23.6 million tonnes or 12 per cent of the country's annual import in 2015-16.
OVL, along with Indian Oil Corp (IOC) and Oil India Ltd, also holds 18 per cent stake in Venezuela's Carabobo-1 project, which currently produces about 16,000 bpd of oil and is expected to reach 90,000 bpd by end of 2017.
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