CARACAS, (Reuters) – A license extended by Venezuela to Shell SHEL.L and Trinidad and Tobago’s National Gas Company (NGC) will allow the companies to produce natural gas off the South American country’s coast for 30 years, state oil company PDVSA said today.
Venezuela, Shell and NGC yesterday signed the license in Caracas for the Dragon project following a U.S. authorization granted in January, which could mark the OPEC country’s first exports of its vast offshore gas reserves.
The license was signed by Trinidad’s energy minister Stuart Young and Venezuela’s oil minister Pedro Tellechea.
The license provides for an initial output of 185 million cubic feet per day of gas to be sent to Trinidad for producing liquefied natural gas (LNG) and petrochemicals, PDVSA said in a release.
Shell did not immediately reply to a request for details.
Dragon and three neighbouring offshore gas fields were discovered by PDVSA and its reserves confirmed over a decade ago. The company installed some infrastructure, did production tests and began building a gasline to Venezuela’s shore. But the project was not commercially developed due to lack of partners, investment and, more recently, U.S. sanctions.
Venezuela is trying to monetize its gas reserves, the largest in Latin America, to complement its revenue from crude and fuel exports, which constitutes the country’s largest source of income in hard currency.
In October, Washington eased sanctions on the country by issuing a 6-month license that allows PDVSA to export crude and gas to its chosen markets, to receive foreign investment and cash proceeds. The authorization is contingent on fulfilling a pact with the opposition towards a presidential election next year.
