Reliance Industries Limited (RIL), which increased more than 1% to reach a new 52-week high of ₹1,611.20, led the upward trend in Indian oil and energy equities on Monday. Gains of up to 2% were also recorded by other oil-related equities including ONGC, Hindustan Petroleum, Indian Oil Corporation, and Oil India. Increased geopolitical developments after a major US military intervention in Venezuela over the weekend, which rekindled interest in Indian firms exposed to Venezuelan oil assets, were the driving force behind the surge.
Even while global crude oil prices remained mostly range-bound amid conflicting signals on supply and demand, the events have once again brought investors’ attention to the strategic and financial consequences of India’s abroad energy investments.
Measured Gains in Oil PSU Stocks
Hindustan Petroleum was the biggest gainer among oil marketing and exploration firms, climbing 1.85% to an intraday high of ₹508.45. Indian Oil Corporation increased 1.03% to ₹168.79, while ONGC increased 1.16% to ₹246.80. Oil India also increased throughout the session, rising 0.47% to ₹432.45.
The increase is a reflection of investors’ cautious optimism, especially with regard to the possibility of unlocking value from long-standing Venezuelan assets owned by Indian public sector companies.
Market Interest Is Rekindled by US Action in Venezuela
International media claim that US forces carried out a massive operation in Venezuela, apprehending President Nicolás Maduro and bringing him to the US to be charged with drug trafficking and narco-terrorism. There is now more uncertainty surrounding Venezuela’s oil industry and its international alliances after former US President Donald Trump declared that the US will supervise government until a “proper transition” occurs.
Expectations of potential restructuring within Venezuela’s energy sector have increased as a result of these events, particularly if sanctions are lifted or ownership arrangements alter under US supervision.
ONGC Exposure in the Spotlight
Due to its abroad division, ONGC Videsh, which owns equity holdings in two Venezuelan oil projects, ONGC is anticipated to continue receiving attention. ONGC may be able to recoup more than $500 million in unpaid dividends from its stake in the San Cristobal oil field, according to global stockbroker Jefferies.
“ONGC has not received its share of dividends from production at San Cristobal, amounting to more than $500 million,” Jefferies stated, pointing out that the possibility of recovery might be increased by better geopolitical situations and the relaxation of sanctions.
Despite continuing production, the US sanctions prevented the dividends from being paid, therefore ONGC was forced to record the sum as receivables on its financial sheet.
Financial Gains and Comfort with Valuation
Jefferies said that ONGC’s already robust cash flows will be strengthened by any rebound from Venezuela. In FY24, the business recorded a free cash flow to the company of ₹473.6 billion and a consolidated net profit of ₹571 billion. With a price-to-book ratio of 0.9x and an earnings yield of more than 18%, ONGC is now trading below book value, allowing for a possible re-rating should Venezuela-related cash flows materialize.
Additionally, the brokerage highlighted potential gains from ONGC’s second Venezuelan asset, the Carabobo field in the Orinoco belt, in which it owns an 11% share.
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