India’s Venezuela oil bet: Opportunity amid uncertainty

The strangest thing about the visit of Delcy Rodríguez, the Acting President of Venezuela, is that it was first announced by the visiting US Secretary of State Marco Rubio. That does not often happen in such high circles, but it did. That underlines the present international situation. Venezuela is part of the Monroe sphere of influence, at least as of now. Delhi, for its part, has always had good relations with Venezuela, and a possible energy deal is extremely welcome news at this point in time. But the devil lies in the details of oil purchases from that country and what they ultimately involve.

A Very Secretive Pact

Venezuela has since vastly increased its oil exports on the back of the lifting of sanctions and a ‘supply pact’ with the US, following the reported arrangement involving the Nicolás Maduro leadership. Unsurprisingly, the main export destination of Venezuela’s oil is the US, followed by India, with Reuters reporting this rising to 374,000 bpd from 342,000 bpd in just one month. Europe has also benefited, as has a further tranche sent to storage terminals in the Caribbean for onward sales. Chevron has meanwhile increased its share and is now responsible for 25 per cent or 308,000 bpd, up from 267,000 bpd in March. Indian refineries are also importing crude through Venezuela’s state-owned company PDVSA.

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The Council on Foreign Relations estimates that some 100 million barrels of oil, worth an estimated $8 billion, have flowed in the first four months after Maduro was effectively removed from direct control. The issue is that there is no clarity on how revenues from these oil sales are being disbursed, and no clear policy evident in how such a highly secretive arrangement is expected to benefit Venezuelans themselves.

That Strange Order from the White House

The White House Executive Order on the issue is clear, if somewhat bizarre. It is titled “Safeguarding Venezuelan oil revenue for the good of the American and Venezuelan people”. The order refers to “Foreign Government Deposit Funds”, which are funds paid to or held by the US Treasury in “accounts or funds on behalf of the Government of Venezuela or its agencies or instrumentalities”, all under a national emergency provision and barred from judicial oversight.

All this is justified by the stated ‘threats’ ranging from drugs to immigration, Hamas, and more. The only saving grace is that the funds are held in US custody and remain technically Venezuelan assets. How the system is to be audited and disbursed remains unclear, especially since the revenue is reportedly held in an account in Qatar to prevent creditors from seizing it through US courts. Treasury Secretary Scott Bessent is said to be in charge, with Rubio having briefed Congress on the arrangement. Meanwhile, commodity trading firms with a murky history remain involved in the disbursement of Venezuela’s oil revenues.

Chinese Bills Are Pending

Now comes the second interesting part — the irony. Venezuela is ranked number one in terms of oil reserves, yet its economy has been in dire straits for years. Current debt levels are estimated at around $150 billion. The US contention that Maduro and his circle drained the country is not without basis. The problem is that elements of the former political establishment continue to hold power.

The new President, Delcy Rodríguez, is hardly fully in control despite her strong political background and family connections. Analysts describe the system as a coalition rather than a single centre of power, including the President’s brother — a US-designated narco-terrorist with a $25 million bounty on his head — and Vladimir Padrino, the military chief who, given Pakistan’s Asim Munir, could be said to have a comparable grip on power, having remained in post for over a decade while also facing narcotics trafficking allegations.

There are others as well, some of whom are closely aligned with China. This brings in the fact that China remains Venezuela’s largest creditor in real terms. Despite holding only a relatively small share of total external debt — estimated at around $10 billion of $150 billion — the real issue is that much of this debt was repaid through oil. Once sanctions hit, repayment shifted into complex arrangements involving subsidies and intermediaries, while China remained a major buyer of Venezuelan oil, albeit at reduced volumes.

Although all subsoil resources belong to the state, the sheer weight of debt led Maduro to enter into complicated arrangements with Chinese banks, allowing not only loans but also equity participation in joint ventures with state firms. Reports also indicate that in late 2025, Reuters noted that at least one Chinese company was developing oil fields, with plans to invest $1 billion.

There is a two-pronged question here. If Caracas cannot repay its debts to China, then as a defaulter, Chinese lenders could claim assets held as collateral. Second, to clear these obligations, the new President would need the US to release oil revenues. As of now, there is no clarity on this, and the likelihood of Washington allowing oil proceeds to be used to repay China appears remote.

Entering the Field

Enter India. As is now apparent, ONGC Videsh acquired two projects in Venezuela in 2008 on an equity participation basis. A survey of the oil sector by the Indian Embassy in 2020 noted inefficiencies in the system, with hydrocarbons contributing just 11 per cent of GDP. Worse still, “the rest of the non-oil productive sectors, representing a non-tradable (89 per cent) segment of the economy, are not working under criteria of efficiency and competitiveness.” Hardly an attractive investment destination.

Yet, India appears willing to provide Venezuela with the technological support it needs in the oil sector. There are several reasons why Indian industry may consider re-entry. For one, over $1 billion in funds remains stuck there, and with new technology, ONGC and others could regain a significant share of Venezuela’s oil market. India also has strong refining capabilities capable of processing almost any grade of crude.

On the import side, longer shipping distances compared to Iran — and therefore higher freight costs — have not previously deterred Indian refiners. Russian crude may still be cheaper, but once the Ukraine war ends, discounts are likely to narrow as Moscow shifts focus back to European markets. Saudi Arabia and other West Asian producers will also take time to scale up, even if hostilities cease immediately.

Overall, the economics appear viable. The key unknown is pricing — once oil was offered at $5-6 below Brent crude — as well as the payment mechanism currently being enforced. Whether this applies to pharmaceuticals as well remains unclear. Venezuela is also rich in critical minerals and other resources, but the country’s weak infrastructure and the presence of criminal networks embedded within state structures make large-scale private investment highly risky.

Conclusion

In short, this is an oil deal unfolding in the context of the Donroe doctrine. While Washington’s ultimate intentions remain unclear, it appears keen to stabilise Venezuela and is therefore cautiously open to Indian participation. Delhi is unlikely to pursue a disruptive agenda, unlike China’s Belt and Road Initiative, which has often been criticised for debt-heavy structures.

For India, China’s debt recovery concerns are not directly relevant. However, while purchasing Venezuelan oil is one matter, large-scale investment presumes that India-US relations remain stable. As the saying goes, necessity shapes policy. For now, this is a windfall opportunity that could help cushion India against future energy shocks. Unsurprisingly, access to affordable oil remains a key priority for the government.

It appears that the Jaishankar doctrine of multi-alignment is functioning effectively in securing critical energy supplies, even aligning with evolving US hemispheric priorities — at least for now. Beyond that, it may be time to become more adventurous, particularly with China watching closely.

(The writer is Director [Research and Analysis] at the Centre for Land Warfare Studies. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)