Raphael John-Lall
While Venezuela will receive the equivalent of millions of US dollars monthly from the gas agreement to exploit the Dragon Gas Field reserves, Director of the Latin American Energy Program at the Rice University’s Baker Institute for Public Policy Dr Francisco Monaldi is not sure that if Venezuela will receive the value in cash or non-cash payments.
Monaldi told the Business Guardian that although it may not change the economic fortunes of Venezuela overnight, Venezuela will benefit by getting millions of dollars monthly from the gas deal once it is operationalised.
“This will mean US$25 million monthly from gas. It’s not a game changer. It’s not a big deal in terms of income for Venezuela even if it was paid in cash but it’s the first opportunity to monetise gas resources that have been in place since the 1990’s. It has never been developed.”
He justified how he arrived at the US$25 million figure.
“It is a very rough high estimate I made a few months back. Production 300 million cubic feet (cf) per day X 30 days X $14 (price) X 20 percent royalty. Initially production will be half that. Of course I do not know the price. It could be lower than that (or less likely higher). Prices have been crazy the last two years, but who knows what it would be in 2025 or 2030.”
He called the signing of the agreement last month between T&T and Venezuela as an important step, but warned that the United States and Venezuela are still in talks over democratic values and so it is still not certain if Venezuela will get pad in cash or humanitarian aid.
“Of course, we don’t know much about the details but the fact that this has been announced it’s likely to move ahead. The United States will facilitate the deal rather than make it an obstacle. They might not give a full green light until other things are unblocked which will be related to sanction relief in other areas. But I am not sure and have no specific knowledge how fast this could happen. Of course they have the green light to negotiate but it’s now to get the details of the deal which was negotiated. There is the thorny issue of cash transfers which is connected to how talks on the political side advance. That may have to be negotiated again.”
Two weeks ago, Energy Minister Stuart Young and Venezuela’s Oil Minister Pedro Tellechea signed the agreement to close negotiations on the Dragon Gas field.
Ongoing talks
Finance Minister Colm Imbert commented on the agreement in his budget speech on Monday saying: “We have been seeking through extensive negotiations, involving the USA and Venezuela, to develop a significant across-the-border field with Venezuela – the Dragon Gas field – and sustainable energy sector.”
Venezuelan President Nicolás Maduro said Venezuela and T&T signed a profit-sharing agreement to export gas from the PDVSA-owned Dragon offshore project.
After the agreement was signed, US business news website Bloomberg elaborated saying that the project, which was halted in 2020 due to US sanctions, entails using a field in Venezuelan waters to produce natural gas, which would be imported by T&T to be processed for export.
The deal, which could see Venezuela exporting gas by 2025, involves transporting supply to T&T’s Atlantic LNG plant via a Shell-owned offshore platform. Young has estimated the field could start with output of 175 million cubic feet per day and ramp up to 350 million cubic feet per day, Bloomberg added.
In January, Prime Minister Dr Keith Rowley said T&T could pay Venezuela for natural gas produced at the offshore development with humanitarian supplies like food and medicine,
He said this would be to comply with a US licence prohibiting cash payments to Maduro’s Government.
More information needed
Former Energy Minister Kevin Ramnarine told the Business Guardian while any progress in this initiative is most welcomed, it is reasonable to expect that the people of T&T would want to know what commitments are being made on their behalf by the Minister of Energy.
“We must recall there was another deal signed in 2018 when Dr Rowley went to Caracas and since then there has not been much movement on the Dragon gas deal which is arguably the center piece of this Governments energy policy. In terms of a next move, it would be useful to know what is the role of the National Gas Company (NGC), the role of Shell and PDVSA and who will pay for the development which will run into hundreds of millions of US dollars or more. What will be the exposure of the NGC?”
He said the “burning question” is when can T&T expect Dragon Field gas to arrive in Trinidad?
“Is it 2026, 2027, 2028, 2029 ....when? Was this most recent signing a signing of a mere agreement on generalities?” he asked.
He added that as far as he is aware there has been no movement on the terms of the Office of Foreign Assets Control (OFAC) licence that offended the Venezuelans, that being the terms of payment for the natural gas.
Co-Founder of the Caribbean Policy Consortium (cpccaribbean.org), professor emeritus at the University of Miami, and a former professor and director of the Institute of International Relations at UWI-St. Augustine, Anthony Bryan told the Business Guardian that while he is not privy to information about how Venezuela will be paid for its share of the profits, the deal is important for T&T since this country needs the gas to satisfy its demands locally in the near term and perhaps, depending on quantities, be able to monetise some for sale to the regional and global markets.
