Trinidad Requests U.S. License Extension for Shell’s Venezuela Gas Initiative

Trinidad seeks a U.S. license extension for Shell and NGC to develop the Dragon gas project in Venezuela. The initial license allowed planning under U.S. sanctions, with an amendment allowing monetary transactions. The project aims for gas supply to Trinidad by 2027, requiring further U.S. approval as production approaches. Prime Minister Rowley emphasizes the regional energy security implications of such partnerships.

Trinidad and Tobago is seeking an extension from the administration of U.S. President Donald Trump for a license that would permit Shell and the National Gas Company (NGC) to advance their gas project in Venezuela. Originally granted in early 2023, this license exempted Shell and NGC from U.S. sanctions against Venezuela, allowing them to make progress on the Dragon natural gas project, designed to deliver gas supplies to Trinidad by 2027.

In 2023, the U.S. government amended the license to permit payments in hard currency or other forms to Venezuela and its state-owned oil company, PDVSA. The expiration date of the license was extended to October 2025. Both Shell and NGC require an additional extension to initiate production once they finalize their investment decision, projected to occur this year.

The Dragon project is estimated to generate initial production of approximately 200 million cubic feet of gas per day. U.S. sanctions target the entire Venezuelan oil and gas sector, administered by PDVSA, necessitating that Trinidad and other international operators acquire U.S. licenses to engage in trade with sanctioned entities.

Prime Minister Keith Rowley remarked that Trinidad’s government would soon communicate to Washington the critical nature of U.S. licenses in developing gas collaborations with Venezuela, particularly highlighting the significance for regional energy security. Specific details regarding the discussions were not disclosed.

Shell and NGC have successfully accessed essential data on the Dragon field and have established a firm belief in the presence of at least 4.2 trillion cubic feet of gas. Shell has conducted a seabed survey to avoid potential hazards and is currently determining the placement of wells, pipeline routes, and subsea tieback strategies.

The involved parties have engaged closely with Trinidad’s Energy Minister Stuart Young and Venezuela’s Vice President Delcy Rodriguez, who both visited the survey vessel recently. NGC has referred queries about the license extension to the Trinidadian government, while Shell declined to comment, and other relevant authorities did not respond.

The Dragon field is situated in Venezuelan waters near the maritime border with Trinidad, which requires the gas to bolster its liquefied natural gas and petrochemical industries, while Venezuela seeks to increase cash flow from gas exports. Despite multiple licenses being issued in recent years, U.S. sanctions have constrained revenue for Venezuelan President Nicolas Maduro, who has criticized these measures as illegitimate.

If negotiations on supply contracts yield favorable prices akin to recent gas agreements in Venezuela, the Dragon project could generate approximately $30 million monthly in revenue, from which Venezuela would receive 20% as royalty payments. “Those numbers would hardly represent a problem for the United States,” indicated a source familiar with the matter.

Energy Minister Young has previously stated that Dragon’s potential production capacity far exceeds its initial outputs. Alongside another Shell project, Manatee, located on the Trinidadian side of the maritime boundary, these initiatives could collectively supply 1 billion cubic feet of gas per day to Trinidad and its primary Atlantic LNG project.

Trinidad and Tobago intends to request an extension for the U.S. license essential for Shell and NGC to advance the Dragon gas project in Venezuela, crucial for regional energy security. The license was initially granted in 2023, allowing these entities to proceed under U.S. sanctions. The project is expected to offer substantial volumes of gas, fostering economic benefits for both Trinidad and Venezuela despite the current geopolitical tensions. Communications with U.S. officials underscore the urgency of maintaining these licenses for energy collaboration. Overall, the Dragon project marks a significant development in the region’s energy landscape, with anticipated benefits following successful negotiations.

Original Source: www.oedigital.com