A natural gas project to be developed in Venezuelan waters by Shell SHEL.L and Trinidad and Tobago’s state firm National Gas Company NGCTT.UL could achieve first output in the next two years if a positive investment decision is made, Trinidad officials said yesterday, according to Reuters.
Venezuela and Trinidad on Thursday signed a 30-year licence granting Shell and NGC the rights to produce the gas and export it to Trinidad. The agreement followed months of negotiations since the United States authorized the project in January, Reuters said.
The US approval and the licence came after the parties had unsuccessfully tried in previous years to strike an agreement for joint offshore gas development.
Dragon and a gas project nearby called Manatee which resides in Trinidad’s waters are expected to contribute up to 1 trillion cubic feet of gas in its first phase, Trinidad’s Energy Minister Stuart Young said. Both fields will compete to inaugurate production.
The Venezuelan licence granted this week provides for an initial output of 185 million cubic feet per day of gas to be sent to Trinidad for production of liquefied natural gas (LNG) and petrochemicals, Venezuela’s state company PDVSA said yesterday.
Reuters said that Trinidad has been trying to gain access to its neighbour’s vast gas reserves as its own output dwindles. On its side, Venezuela is looking for a fresh source of cash from exports.
“What we have done is to find additional resources, and fortunately, we have been able to get an agreement with the government of Venezuela,” Prime Minister Keith Rowley said in a broadcast press conference.
Shell will operate the Dragon project and a 18-kilometer pipeline that will link Dragon to its Hibiscus production platform in Trinidad, Young stated, according to Reuters.
Had Trinidad and Tobago not maintained a close relationship with Venezuela, Shell would not have been given the opportunity to participate in the project, Rowley said.
Some U.S. sanctions on Venezuela were eased in October to encourage free elections in the country next year.
“We have been speaking to Venezuela on all issues”, Rowley said, referring to controversial topics including a territorial controversy between Venezuela and Guyana. “But at the end of the day, Trinidad and Tobago stands on its principles.”
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.
Rowley was enthused at the deal.
“Ladies and gentlemen, this is a historic development on a historic day for the people of Venezuela and the people of Trinidad and Tobago,” Rowley said, according to the Trinidad Express.
He added: “To have entered into this agreement in 2023, to open this door to allow us with the infrastructure on the ground in Trinidad, to access and process the raw material from below the ground in Venezuela, puts the two nations in a position to play a bigger and beneficial role in the world’s economy and for the benefit of the people of Venezuela and Trinidad and Tobago.”
Noting that Venezuela has a large confirmed reserve of natural gas, Rowley said the Dragon agreement is the first of what he anticipates will be many between Trinidad and Tobago and Venezuela, the Trinidad Express reported.
“And, it has nothing to do about today’s politics and who’s in office today, it has to do between who are the people of Venezuela and who are the people of Trinidad and Tobago, and as long as we remain neighbourly with respect for each other, acting in good order, this is sustainable for a long, long time”, he said.
Commenting on the benefit of the agreement, the PM said it means that Trinidad and Tobago is now in a position to access more gas to keep the country in the gas business longer, while for the people of Venezuela, it means that they will have access to the international market and benefit from the earnings of this operation. “Whether it is Government or Opposition, this is for the benefit for the people of Venezuela and for the people of Trinidad and Tobago,” Rowley stated, according to the Trinidad Express.
He added: “I ask you today to ignore the naysayers and to accept that this is an extremely important development if only to preserve the ability to aspire to the quality of life we had become accustomed to in the islands of Trinidad and Tobago.”
Energy Minister Stuart Young, who also addressed the media, said the agreement and licence, which was finalized around 9pm on Thursday, was the culmination of seven years of hard work.
He said that the entire process began in 2016 with a government-to-government agreement, and later that same year a further agreement was signed, before moving to a commercial term sheet in 2018.
He said at that time the licences were held by Venezuela’s state-owned oil company PDVSA, however, that is no longer the case.
“And today, as of nine o’clock last night, Trinidad and Tobago now has the licence and it’s going to be gazetted as in accordance with Venezuelan law, in Venezuela, and approved by the Government. The licence for the exploitation and production of gas from Dragon now resides with Trinidad and Tobago with full commercial terms negotiated,” Young said.
Young noted that there was a slight but significant change to the agreement. “We were able to move PDVSA out of the formula which is even better for us now. And, the producers will be Shell and NGC (National Gas Company). We manage to negotiate that NGC will be in the full value chain and that we’re going to be an equity player in the production and the exportation of this gas to Trinidad and Tobago, at a very competitive price that will benefit both the people of Venezuela and us here in Trinidad and Tobago”, the Trinidad Express reported.
