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.