Trinidad and Tobago aims to extend a U.S. license for Shell and NGC to develop the Dragon gas project in Venezuela, crucial for both nations’ energy security. The project’s viability hinges on navigating U.S. sanctions and securing investments, with significant production expected by 2027. An extension is necessary for advancing this strategic partnership, which could yield substantial financial benefits.
Trinidad and Tobago intends to request an extension from the U.S. government regarding a license that allows Shell and Trinidad’s National Gas Company (NGC) to pursue a significant gas project in Venezuela. The original license was granted in early 2023 to exempt them from U.S. sanctions, facilitating the advancement of the Dragon natural gas project, which aims to deliver gas to Trinidad by approximately 2027.
The U.S. modified the license in the same year to permit cash or non-cash payments to Venezuela and its state-owned company PDVSA for gas supplies, extending its expiration to October 2025. An extension is vital for Shell and NGC to commence production after a projected final investment decision, anticipated later this year.
The planned initial output for the Dragon project is roughly 200 million cubic feet per day. U.S. sanctions, which encompass the entire Venezuelan oil and gas sector dominated by PDVSA, necessitate that countries like Trinidad obtain U.S. licenses to export or make payments to sanctioned entities.
Prime Minister Keith Rowley emphasized the necessity of retaining U.S. licenses for gas development projects with Venezuela, citing implications for regional energy security. However, he did not provide specifics about the upcoming discussions.
Shell and NGC have successfully accessed various geological data regarding the Dragon field, confirming the existence of approximately 4.2 trillion cubic feet of gas, as previously asserted by PDVSA. A seabed survey has been completed to assess drilling conditions and potential pipeline routes to Trinidad facilities.
Both entities have been collaborating closely with Trinidad’s Energy Minister Stuart Young and Venezuela’s Vice President Delcy Rodriguez during the offshore surveys. While NGC directed inquiries about the license extension to the Trinidad government, Shell declined to comment., and no responses were received from PDVSA, the Trinidad energy ministry, or the U.S. Treasury regarding requests for information.
The Dragon field, situated in Venezuelan waters alongside Trinidad’s maritime boundary, is vital for Trinidad’s energy needs while providing Venezuela with potential cash flow through gas exports. U.S. sanctions imposed to counteract Venezuelan President Nicolas Maduro’s administration have restricted numerous revenue sources since their inception in 2019, amid ongoing claims of economic warfare by Maduro and his allies.
If Trinidad, Venezuela, and Shell reach favorable supply contract negotiations, the anticipated volumes from the Dragon project could yield approximately $30 million monthly in revenues, with 20% allocated to Venezuela as royalty payments, according to consultancy Gas Energy Latin America’s analysis. As one source remarked, this revenue would not likely pose significant concerns for U.S. authorities.
The Trinidad energy minister mentioned previously that the potential output from the Dragon project far exceeds its initial production figures. Together with another Shell project named Manatee, which lies across the border in Trinidad, the Dragon field could supply a total of about 1 billion cubic feet of gas per day, contributing to Trinidad’s pivotal Atlantic LNG project.
In summary, Trinidad and Tobago is preparing to seek an extension for a U.S. license that enables Shell and NGC to advance the Dragon gas project in Venezuela, essential for both nations’ energy sectors. The planned output and collaboration reflect the project’s significance, while broader geopolitical implications tied to U.S. sanctions and economic dynamics continue to shape the prospects of this venture.
Original Source: money.usnews.com
