The crisis came to light after it was revealed state owned firm PDVSA has not made a single debt payments to India’s top oil producer ONGC for six months.
It was previously using a Russian state-owned bank and another Indian energy company as intermediaries to make payments.
Since April PDVSA have not made a payment to ONGC which is also owed $540million in a backlog of dividends due to an investment the Indian firm made on an energy project in Venezuela.
Venezuela’s President Nicolas Maduro said last week the country is planning to restructure some $60billion of bonds, a large amount which is held by PDVSA.
ONGC Videsh, the overseas investment arm of ONGC, revealed PDVSA had fallen behind on its payments.
The Indian company seems to be reasonably calm about the lack of payments for half a year and stated they were willing to give Maduro the benefit of the doubt.
A spokesman for ONGC Videsh said: “They have got certain challenges at this stage.
“They have assured that they are working on it (payment of dues). In due course it will be settled and follow up steps will be undertaken.”
Despite this, Venezuela could declare insolvency within hours.
The last payment PDVSA did not make a was on a $1.1 billion bill due last Friday.
Siobhan Morden, head of Latin American bond strategy at Nomura, said: “There has been no official communication on the payment delays. It is really odd that funds haven’t been received with sufficient time to process if the funds were sent last week as officials indicated.”
According to Bloomberg, the International Swaps and Derivatives Association has agreed to review a request to determine if a default stage has occurred due to the lack of payments.
International banks have either stopped or heavily reduced credit available to PDVSA .
The ISDA is meeting on November 13 for a bond restructuring summit.
However, US investors are far from confident regarding this meeting.
Russia could, however, save Venezuela from crisis if it agrees to help.
It is hoped the two nations will sign a debt restructuring deal on November 15 with a term of around 10 years, with payments rising gradually, a source familiar with negotiations said on Friday.
Venezuela will have to pay back Russia a significant amount of money before the end of 2017 for the agreement to come into force, the source told reporters.
Under the deal, Venezuela must also pay Russian exporters for products already delivered.
Venezuela has agreed to restructure debts to Moscow worth $3 billion on earlier agreed terms, Russian Finance Minister Anton Siluanov previously said.