Oil and Natural Gas Corp (ONGC), the state-owned company has secured a licence from the US Treasury’s Office of Foreign Assets Control (OFAC) that allows it to resume full operations in Venezuela. It is coming after years of limiting activity because of sanctions-related risks.

“The US approval removes a key hurdle for ONGC’s Venezuelan investments and could pave the way for the state-run explorer to expand production, sign new agreements and take over operatorship of some projects from Venezuela’s state oil company PDVSA,” Anupam Agarwal, director-finance at ONGC, said at an investor call.

US sanctions on Venezuela’s oil sector have for years complicated financial transactions, investment and operations involving Venezuelan crude and energy assets.

“Now we have full freedom to work on the Venezuela project because earlier we were restricting our operations there because of the sanction-related risks. Those risks are behind us,” Agarwal said.

ONGC is already in talks with Venezuelan authorities and its joint-venture partners over its interests in two projects, San Cristobal and Carabobo, and expects positive developments soon, including new agreements and a possible transfer of operatorship from PDVSA, he said.

Notably, an OFAC license would enable the company to manage the finances of its Venezuelan projects and help it recover a pending dividend of more than USD 500 million.

Venezuela’s newly enacted petroleum law provides additional fiscal incentives for resource development, potentially improving the investment environment for foreign oil companies and their local partners. ONGC’s focus is on shallow, onshore fields in Venezuela, where it has relevant operating expertise from its domestic fields in Western India, including Mehsana and Ahmedabad, Anupam Agarwal said.

OVL has invested in Venezuelan oil assets through joint ventures. However, the sanctions imposed by Washington on Venezuela’s oil sector have periodically restricted the scope of operations and dealings with PDVSA.

(With inputs from Agencies)