Trinidad Requests U.S. License Extension for Shell’s Venezuela Gas Project
Trinidad and Tobago seeks an extension from the U.S. for a license allowing Shell and NGC to develop the Venezuela gas project Dragon. The license enables the project to proceed despite U.S. sanctions, crucial for Trinidad’s energy needs. Prime Minister Keith Rowley emphasized the importance of these licenses for regional energy security, while the project is anticipated to boost gas supplies significantly.
Trinidad and Tobago is preparing to request an extension from the U.S. government for a license allowing Shell and the National Gas Company (NGC) to develop the Dragon natural gas project in Venezuela. This license, initially granted in early 2023, provided an exemption from U.S. sanctions, enabling the companies to advance their planning efforts for the project, which aims to supply gas to Trinidad starting around 2027.
The U.S. government amended the license later in 2023 to permit payments in hard currency or equivalent goods to Venezuela’s state-run PDVSA for gas supplies, also extending the license’s validity until October 2025. Shell and NGC will require this extension in order to commence production following their final investment decision on the project, anticipated within the year.
The Dragon project’s expected initial production is projected at approximately 200 million cubic feet per day. U.S. sanctions, impacting the entire Venezuelan oil and gas sector, necessitate licenses for entities like Trinidad and private operators to engage with sanctioned Venezuelan companies, further complicating the development process.
Trinidad’s Prime Minister, Keith Rowley, has indicated the government’s intent to discuss the necessity of maintaining U.S. licenses for gas development projects with Venezuela, emphasizing their vital role in regional energy security, though specific details on the discussions have not been disclosed.
With access to critical geological data, Shell and NGC are confident in the project’s viability, believing in the presence of at least 4.2 trillion cubic feet of gas as indicated by PDVSA. Shell also conducted a seabed survey, assessing potential drilling sites and pipeline routes, completing preliminary safety checks.
Cooperation between Shell, NGC, Trinidad’s Energy Minister Stuart Young, and Venezuela’s Vice President Delcy Rodriguez has been ongoing, with the latter visiting the survey vessel. While NGC referred questions about the license extension to Trinidad’s government, Shell declined to comment, and responses from PDVSA, Trinidad’s energy ministry, and the U.S. Treasury have not yet materialized.
The Dragon field, located near Trinidad’s maritime border, is crucial for bolstering Trinidad’s liquefied natural gas and petrochemical sectors, simultaneously providing Venezuela with much-needed cash flow from gas exports. U.S. sanctions, imposed on the energy sector since 2019, have significantly restricted revenue opportunities for Venezuelan President Nicolas Maduro, who has condemned these actions as economically hostile.
If negotiations for supply contracts yield favorable pricing similar to recent contracts in Venezuela, the Dragon project could generate approximately $30 million monthly, with a significant portion funneled into Venezuela’s treasury as royalties. Trinidad’s Energy Minister Stuart Young stated that the potential output from Dragon and another project called Manatee could collectively provide up to 1 billion cubic feet of gas per day for Trinidad’s Atlantic LNG operations.
In summary, Trinidad and Tobago is actively seeking an extension for a crucial U.S. license required for Shell and NGC to develop the Dragon gas project in Venezuela. This project holds significant energy potential for Trinidad and aims to mitigate regional energy security concerns. Continued collaboration with U.S. authorities and regional stakeholders is essential for advancing this strategic energy initiative amid ongoing sanctions against Venezuela’s oil and gas industry.
Original Source: www.oedigital.com
