Trinidad and Tobago to Request U.S. License Extension for Shell’s Gas Project
Trinidad and Tobago seeks a U.S. extension for the Shell and NGC Dragon gas project in Venezuela, initially sanctioned in 2023. The ongoing project aims to supply gas to Trinidad by 2027, with an initial output of 200 million cubic feet per day. Despite U.S. sanctions, collaborations continue to bolster regional energy security and economic viability for both nations.
Trinidad and Tobago intends to formally request an extension from the U.S. government regarding a license that permits Shell and the National Gas Company of Trinidad and Tobago (NGC) to advance the Dragon natural gas project in Venezuela. Initially granted in early 2023, this license provided an exemption from U.S. sanctions against Venezuela, facilitating planning for the project designed to supply gas to Trinidad by approximately 2027.
In 2023, revisions to the initial license allowed payments in hard currency or commodities to Venezuela’s state-run PDVSA for gas supplies, extending the license expiry to October 2025. Shell and NGC are anticipated to require an extension to commence production following a final investment decision expected this year. The Dragon project is projected to initiate production flow of about 200 million cubic feet per day.
U.S. sanctions on Venezuela’s oil and gas sector, overseen by PDVSA, necessitate that nations and companies like Trinidad seeking to engage with sanctioned entities obtain U.S. licenses for exports or revenue payments. Prime Minister Keith Rowley remarked that the Trinidadian government would soon communicate with Washington regarding the importance of maintaining licenses for gas project development with Venezuela for regional energy security.
Shell and NGC possess detailed data regarding the Dragon field and believe that the gas reserves meet the estimates provided by PDVSA. They have conducted a seabed survey to identify potential hazards and are currently finalizing the drilling plans, pipeline routes, and subsea connections necessary for the project.
Both organizations are collaborating with Trinidad’s Energy Minister Stuart Young and Venezuela’s Vice President Delcy Rodriguez, who have visited the survey vessel. While the NGC has imposed restrictions on discussing the license extension, Shell opted not to comment on the matter, and inquiries directed to PDVSA, Trinidad’s Ministry of Energy, and the U.S. Treasury went unanswered.
The Dragon gas field is situated in Venezuelan waters, adjacent to Trinidad. Trinidad’s need for fuel is driven by its liquefied natural gas and petrochemical sectors, while Venezuela looks to generate revenue through gas exports. Despite numerous licenses established in recent years, U.S. sanctions have constrained funding for Venezuelan President Nicolas Maduro’s government amid allegations of election illegitimacy and subsequent economic strife.
President Maduro’s administration has condemned these sanctions, describing them as detrimental measures aimed at destabilizing the economy, yet has acknowledged the nation’s ongoing resilience. Should negotiations regarding supply contracts yield favorable pricing for Trinidad, the Dragon project could generate approximately $30 million monthly, with a portion allocated as royalties to the Venezuelan government, alleviating potential U.S. concerns regarding revenue generation.
Trinidad’s Energy Minister Young previously indicated that the potential output of the Dragon field far exceeds its initial estimates. The combination of Dragon’s production capabilities, alongside Shell’s adjacent Manatee project, could provide up to 1 billion cubic feet of gas daily to Trinidad’s vital Atlantic LNG facility.
In summary, Trinidad and Tobago is set to request an extension of the U.S. license for Shell’s Dragon natural gas project in Venezuela, vital for both Trinidad’s energy supply and Venezuela’s economic recovery. This request underscores the region’s commitment to energy security while navigating the challenges posed by U.S. sanctions. The anticipated collaboration signifies potential economic benefits and a reinforcement of bilateral relations in energy production.
Original Source: money.usnews.com
