Venezuela's state oil company PDVSA has halted payment to India's ONGC Videsh Ltd (OVL), Managing Director N K Verma said on Thursday, a move that could threaten the future financing of the San Cristobal energy project in the sanctions-hit South American nation.

OVL, the overseas investment arm of India's top explorer, Oil and Natural Gas Corp, holds a 40 percent stake in San Cristobal, where production has fallen to about 18,000 bpd.

"They paid us three instalments and have not paid any money for more than six months," Verma said, adding the company is owed about $444 million.

ONGC had agreed to arrange financing of $300 million for the project to stop the output decline, Verma said. Cash-strapped Venezuela is struggling to raise funds due to U.S. sanctions and its economic meltdown, which has led to a slump in oil production to around 30-year lows.

"We want them to honour the agreement (to complete payments) as financing of the project oil is linked to that. Otherwise the project will die," Verma told reporters at a news conference. OVL also owns about 11 percent of the PetroCarabobo project, which is in preproduction.

PDVSA planned to build a $5 billion-$6 billion upgrader at the project to improve the quality of very heavy oil produced in Venezuela's Orinoco Belt.

According to the initial agreement, the dividend payment to the companies developing the Carabobo project was linked to the development of the upgrader. The project was expected to produce 400,000 barrels per day of oil at peak rate but is now only producing about 22,000 bpd.

"We have asked PDVSA to delink the development of the upgrader with the project and give us a dividend so that some revenue could flow to us," Verma said.

PDVSA officials have said they must obtain approval from the company's board and the parliament. PDVSA did not respond to a request for comment on Thursday.

First Published:Jun 1, 2018 8:48 AM IST