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.)”
