Trinidad and Tobago intends to request a U.S. license extension for Shell and its National Gas Company to develop the Dragon natural gas project in Venezuela, necessary for gas supply to Trinidad around 2027. The license modification allows payments to Venezuela, requiring further extension for Shell and NGC to begin production following an expected investment decision this year. The project aims to address Trinidad’s energy needs while generating revenue for Venezuela amidst U.S. sanctions.
Trinidad and Tobago plans to request an extension for the U.S. license enabling Shell and Trinidad’s National Gas Company (NGC) to develop a significant gas project in Venezuela. This license was initially granted in early 2023 as an exemption to U.S. sanctions, allowing progress on the Dragon natural gas project, intended to supply gas to Trinidad starting around 2027.
In 2023, the U.S. amended the license to facilitate payments in hard currency to Venezuela and state company PDVSA, extending its expiration to October 2025. Shell and NGC seek an extension to commence production following their final investment decision for the project, anticipated within this year. Initial production from Dragon is estimated at about 200 million cubic feet per day.
U.S. sanctions cover the entirety of Venezuela’s oil and gas sector, which is dominated by PDVSA, requiring compliant nations like Trinidad to secure U.S. licenses for trade with sanctioned entities. Trinidad’s Prime Minister, Keith Rowley, emphasized the necessity of these licenses for regional energy security in communications with Washington, although details on discussions were not provided.
Both Shell and NGC have access to comprehensive geological data for the Dragon field and are confident that it contains the 4.2 trillion cubic feet of gas claimed by PDVSA. Shell has conducted seabed surveys to avoid potential hazards and is finalizing plans for drilling and pipeline routes.
Trinidad’s Energy Minister, Stuart Young, and Venezuela’s Vice President, Delcy Rodriguez, have engaged directly regarding the project, with NGC deferring inquiries about the license extension to the government, while Shell declined to comment. Various requests for statements from PDVSA and U.S. authorities were not answered promptly.
The Dragon field is strategically situated in Venezuelan waters near Trinidad’s maritime boundary, where Trinidad seeks additional fuel for its liquefied natural gas and petrochemical sectors, while Venezuela aims to generate cash flow from gas exports. U.S. sanctions, imposed in 2019, have decreased revenue sources for the Venezuelan government, provoking condemnation from President Maduro and his associates, who describe them as an economic assault.
Negotiations among Trinidad, Venezuela, and Shell regarding supply contracts may yield revenue of approximately $30 million per month from sales of Dragon gas, with 20% allocated to Venezuela as royalties. These financial figures reportedly would not pose significant concerns for U.S. authorities. Minister Young previously stated that Dragon’s potential production greatly exceeds initial output forecasts.
If brought to fruition, the Dragon project, along with Shell’s Manatee initiative on the Trinidad side, could collectively supply Trinidad with up to 1 billion cubic feet of gas per day, significantly benefiting the nation’s flagship Atlantic LNG project.
In summary, Trinidad and Tobago is actively seeking an extension of the U.S. license for Shell and NGC to develop the Dragon gas project in Venezuela. Given the geopolitical complexities and the implications of U.S. sanctions, Trinidad emphasizes the importance of this project for regional energy security. With anticipated production capability and financial returns, the project stands to enhance both Trinidad’s energy landscape and Venezuela’s economic situation under challenging circumstances.
Original Source: www.oedigital.com
