ONGC Eyes $500 Million Dividend Payout as US Considers Lifting Venezuela Oil Sanctions

Global broking firm Jefferies has stated that ONGC may be about to unlock $500 million in long-pending dividends from its Venezuelan upstream project, pointing to a possible boost to the state-run explorer's balance sheet and sentiment should a US-led restructuring of the Latin American country's oil sector succeed. Jefferies points out in a note that ONGC has not received its portion of the more than US$500 million in dividends from the production at San Cristobal.

According to the broking, ONGC may be able to recoup these owed sums as a result of the US intervening, which would be advantageous for a potential US takeover of Venezuela's oil sector and the corresponding lifting of sanctions. Given that ONGC achieved a consolidated net profit of INR 571 billion in FY24 with a free cash flow to firm (FCFF) of INR 473.6 billion and a double-digit FCF yield, Jefferies contends that the recovery of these dues would occur on top of strong current cash creation. It notes that the company currently trades below book, with an earnings yield of 18.1% and a price-to-book ratio of 0.9 times for FY24—metrics that allow for re-rating should Venezuelan cash flows be released.

Why Now Possibilities are at ONGC’s Favour?

Jefferies observes that a shift in the governance and marketing of Venezuelan crude may influence this assessment. The report reiterates that ONGC may be able to recover these outstanding amounts with the US stepping in. It frames the prospective inflow as a significant cash event given that the company's net debt position at the end of FY24 was INR 776.9 billion, and its net debt-to-EBITDA multiple was just 0.7 times.

ONGC's interest in the San Cristobal field in Venezuela, held through its foreign division ONGC Videsh, is the source of the outstanding dividends. Investors are dubious about the timeframe and surety of recovery because US sanctions on Caracas effectively prevented earnings from being repatriated, requiring ONGC to keep the receivable on its books.

Shift in Governance a Profitable Move for ONGC

Jefferies highlights the option value included in ONGC's second Venezuelan asset in addition to the San Cristobal receivables. Additionally, it may be able to develop the Carabobo field in Venezuela's Orinoco belt; according to the analysts, ONGC owns an 11% equity stake in the field. They speculate that a more favourable operating and financial climate under US supervision might revive plans for capital expenditures that have stalled.

Jefferies maintains a "Buy" rating with a price target of INR 310, indicating a 28% increase from the previous closing of INR 241.50, and values ONGC's consolidated business at 8.2 times December 2026 future earnings. While positioning the potential US$500 million dividend payout as an additional medium-term catalyst, the broker warns that weaker Brent, lower crude/gas price realisations, and/or lower-than-expected production from KG 98/2 are important downside risks.