Raphael John-Lall

While both Prime Min­is­ter Dr Kei­th Row­ley and En­er­gy Min­is­ter Stu­art Young have had to as­sure T&T that work is ad­vanc­ing on the Drag­on gas field project, Venezue­lan an­a­lyst and writer, Werther San­doval is op­ti­mistic that the de­vel­op­ment will be pro­duc­ing its first gas by 2027.

In April, Prime Min­is­ter Dr Kei­th Row­ley as­sured that nec­es­sary work to ac­cess nat­ur­al gas from Venezuela’s Drag­on gas field is be­ing ac­tive­ly pur­sued at present.

He made the state­ment in the House of Rep­re­sen­ta­tives, in re­sponse to a ques­tion re­lat­ed to the mat­ter from Pointe-a-Pierre MP David Lee.

In ear­ly May, Young said that T&T is al­ready pay­ing an un­stat­ed por­tion of over US$1 mil­lion per year in tax­es to Venezuela for the Drag­on gas field.

He was re­ply­ing to a ques­tion by Lee in Par­lia­ment, ask­ing what pay­ments will the Na­tion­al Gas Com­pa­ny (NGC) make to Venezuela be­fore gas is pro­duced based on Venezuela’s li­cence grant­ed to Shell and NGC.

Last Mon­day, in an ar­ti­cle in the Venezue­lan dai­ly news­pa­per, El Ul­ti­mas Noti­cias, San­doval wrote that the first “mol­e­cule of gas” from the Drag­on field op­er­at­ed by the al­liance be­tween PDVSA, NGC and Shell Venezuela, will come to the sur­face in 2027, and will be des­tined for the liq­ue­fac­tion and petro­chem­i­cal plants lo­cat­ed in T&T, from where it will leave for Eu­ro­pean coun­tries.

“T&T has been en­cour­aged to re­ac­ti­vate the At­lantic LNG liq­ue­fac­tion plants and thus re­gain its place of be­ing, af­ter the Unit­ed States, the sec­ond gas ex­port­ing coun­try in the Amer­i­c­as. With this pur­pose, T&T launched an en­tire geopo­lit­i­cal strat­e­gy aimed at get­ting the As­set Con­trol Of­fice (OFAC) of the US Trea­sury De­part­ment to is­sue a li­cence that would al­low it to act, to­geth­er with Shell, in Venezuela. With these ac­tions, the Caribbean coun­try be­comes a com­peti­tor of Venezuela, es­pe­cial­ly in the petro­chem­i­cal sec­tor,” San­doval wrote.

He re­ferred to an ar­ti­cle writ­ten by Ar­gen­tine en­er­gy jour­nal­ist, Nicolás Deza, in the Econo­jour­nal Mag­a­zine which stat­ed that T&T has as­signed a very im­por­tant role to the Drag­on deal to re­vive its LNG ex­ports as quick­ly as pos­si­ble as the col­lapse of na­tion­al gas pro­duc­tion left the coun­try with near­ly two-thirds of its liq­ue­fac­tion ca­pac­i­ty out of ser­vice.

“T&T’s liq­ue­fied gas ex­ports record­ed by S&P Glob­al Com­mod­i­ty In­sights be­tween Jan­u­ary and Sep­tem­ber 2023 amount­ed to 6.5 mil­lion tonnes. It rep­re­sents just over a third of the to­tal liq­ue­fac­tion ca­pac­i­ty ex­ist­ing at At­lantic LNG fa­cil­i­ties. The com­pa­ny has four liq­ue­fac­tion trains with a to­tal ca­pac­i­ty of 15.8 mil­lion tonnes per year.”

San­doval said get­ting the non-as­so­ci­at­ed gas from the Drag­on Field to the At­lantic LNG liq­ue­fac­tion trains re­quires the con­struc­tion be­tween the coun­tries of a 17-kilo­me­ter-long gas pipeline, through which 4.2 tril­lion cu­bic feet (tcf) of non-as­so­ci­at­ed or free gas will tran­sit through the Gulf of Paria, from the Venezue­lan state of Su­cre.

He re­ferred to a study by Venezue­lan lawyer and en­er­gy con­sul­tant, Simón Her­rera, en­ti­tled “De­vel­op­ment of the nat­ur­al gas project in the Drag­on field be­tween Venezuela and T&T” which states that the Drag­on field is part of the Mariscal Su­cre off­shore gas project in the Gulf of Paria, along with the Mejil­lones, Patao and Río Caribe fields.

In these fields, Venezue­lan has nat­ur­al gas re­serves equiv­a­lent to 14.3 tcf, not to men­tion con­den­sates.

San­doval al­so re­mind­ed that an agree­ment to de­vel­op the ma­rine gas project in the Drag­on field was pub­lished in the Ex­tra­or­di­nary Of­fi­cial Gazette num­ber 6,793, on Jan­u­ary 29, 2024. It es­tab­lish­es that the com­pa­ny NGC and Shell will pay Venezuela no less than 45 per cent of the gross in­come of the project.

It al­so adds that T&T will pay a 20 per cent roy­al­ty for dry gas from Venezuela’s Drag­on Field and 30 per cent for heavy hy­dro­car­bons as­so­ci­at­ed with the gas, if found. All as­so­ci­at­ed liq­uid will pass in­to the hands of PDVSA.

He al­so not­ed that in the Drag­on Field, Shell would be the op­er­a­tor of the project and the fu­ture 17-kilo­me­ter gas pipeline that will al­low gas to be im­port­ed from Venezuela and that Shell could al­so soon make a fi­nal in­vest­ment de­ci­sion on Man­a­tee, an off­shore gas field off the east coast of Trinidad. Man­a­tee is part of the Lo­ran-Man­a­tee dis­cov­ery shared with Venezuela.

Proven re­serves amount to 10 tcf, about 7.3 tcf in Lo­ran (on the Venezue­lan side) and 2.7 tcf in Man­a­tee.

He not­ed that up to 70 per cent of the gas pro­duced in the Drag­on field will be sent to the liq­ue­fac­tion plants owned by At­lantic LNG and 30 per cent to the petro­chem­i­cal plants in Trinidad. The li­cense grant­ed by the Gov­ern­ment of Venezuela will have a du­ra­tion of 30 years, start­ing from its pub­li­ca­tion in the Of­fi­cial Gazette of Venezuela, and will have the pos­si­bil­i­ty of be­ing ex­tend­ed for the pe­ri­od agreed up­on by the par­ties.

More time need­ed

Com­ment­ing on the Venezue­lan en­er­gy ar­ti­cle and the lat­est up­dates from T&T’s En­er­gy Min­is­ter, Fran­cis­co Monal­di, Di­rec­tor of the Latin Amer­i­ca En­er­gy Pro­gram at the Cen­ter for En­er­gy Stud­ies at Rice Uni­ver­si­ty, Bak­er In­sti­tute for Pub­lic Pol­i­cy told the Busi­ness Guardian than it is too ear­ly to tell when the first gas will be pro­duced from the agree­ment.

“This is still too ear­ly to say. If be­fore Oc­to­ber 2025, when the cur­rent two-year OFAC li­cense ex­pires, the project re­ceives a long-term li­cence from OFAC and Shell/NGC take the fi­nal in­vest­ment de­ci­sion (FID), first gas could be pro­duced by the end of 2027, but more like­ly in 2028. If the new ex­tend­ed li­cense is not ap­proved in a time­ly fash­ion, it would take longer. I think there is a sig­nif­i­cant chance that it would move ahead.”

Re­act­ing to T&T’s En­er­gy Min­is­ter’s an­nounce­ment about T&T now pay­ing its first tax­es to Venezuela, Monal­di said he is “not sur­prised.”

“This not sur­pris­ing. When you get a gas li­cence you typ­i­cal­ly have to pay some small tax­es (e.g. sur­face area tax­es) to keep it (Shell/NGC got a 30-year gas li­cense.)”