New Delhi, Jan 6 (NationPress) An upturn in oil production in Venezuela by US corporations could potentially lead to a decrease in crude prices globally, positively impacting nations like India. Nonetheless, analysts caution that the geopolitical instability in the region may deter substantial investments in this Latin American nation.

Unlike China, India is not a significant importer of Venezuelan crude, known for its heavy and tar-like consistency, which makes refining into petrol, diesel, jet fuel, and LPG financially burdensome. With the exception of the Reliance refinery in Jamnagar, most Indian refineries lack the necessary configuration to process this type of crude.

Nevertheless, India's upstream oil giant ONGC, via its subsidiary ONGC Videsh, holds a 40 percent stake in Venezuela's San Cristobal Project. Additionally, OVL, Indian Oil Corporation, and Oil India possess an 11 percent interest in the Carabobo-1 field.

A potential takeover of Venezuela's oil sector by US entities could lead to the lifting of sanctions on Venezuelan crude exports.

This scenario might enable ONGC to reclaim its $500 million in overdue dividends from the San Cristobal field, which have been in arrears since 2014. Following 2014, production ceased, halting dividend accruals and transforming the Indian oil major's Venezuelan investment into a compromised asset.

The Venezuelan oil industry has plummeted from over 3 million barrels per day to approximately 1.4 million barrels daily due to neglect and international sanctions. Experts believe that substantial investments will be necessary over several years to significantly boost production.

To elevate output beyond the current 1.4 million bpd, a steady investment of $8-9 billion annually from 2026 to 2040 will be crucial, in addition to 'hold-flat' capital needs. According to a report, Venezuelan crude production could rebound to 2 million bpd by 2032 and reach 3 million bpd by 2040.

While some of this investment may be sourced organically by Venezuela's state-owned oil company PDVSA, a commitment of at least $30-35 billion in international capital will be essential within the next 2-3 years to make the 3 million bpd target by 2040 feasible, states global consultancy Rystad Energy.

In the late 1990s, US imports of Venezuelan crude peaked at almost 2 million barrels per day, comprising more than half of the country's output. However, by the end of last year, US imports from Venezuela had dwindled to just 135,000 barrels daily.

Restoring Venezuela's crude production to 3 million barrels per day is projected to require 16 years of dedicated effort and an investment of $185 billion, according to Rystad Energy.