Raphael John-Lall

Di­rec­tor of the Latin Amer­i­can En­er­gy Pro­gram, Rice Uni­ver­si­ty’s Bak­er In­sti­tute for Pub­lic Pol­i­cy, Dr Fran­cis­co Monal­di be­lieves that the lat­est meet­ing be­tween T&T and Venezuela over the Drag­on Gas Field ne­go­ti­a­tions could be a “win-win” for both coun­tries.

Last Tues­day, En­er­gy Min­is­ter Stu­art Young met Venezue­lan Pres­i­dent Nico­las Maduro at Mi­raflo­res Palace in Cara­cas and while Venezuela’s Gov­ern­ment is­sued a short re­lease to the me­dia, it gave no de­tails about what was dis­cussed.

Cara­cas is cur­rent­ly en­gaged in ne­go­ti­a­tions with Port-of-Spain to ex­port nat­ur­al gas from Venezuela’s Drag­on Field, which is es­ti­mat­ed to hold up to 4.2 tril­lion cu­bic feet (tcf) of nat­ur­al gas re­serves. The op­er­a­tions would be run by Dutch multi­na­tion­al cor­po­ra­tion Shell.

As T&T and Venezuela have been tight-lipped over de­tails, Monal­di said he is not sure where in the ne­go­ti­a­tions both sides have reached but Tues­day’s meet­ing shows that the gas ne­go­ti­a­tions are “on the agen­da” for both coun­tries.

In March 2023, of­fi­cials from both the coun­tries signed non-dis­clo­sure agree­ments re­quired to es­tab­lish the ne­go­ti­a­tion frame­work.

That fol­lowed the Jan­u­ary 2023 de­ci­sion by the US ad­min­is­tra­tion to is­sue a two-year li­cence to T&T to com­mence the Drag­on project fol­low­ing lengthy ap­peals by Port- of-Spain and its neigh­bours.

“The ne­go­ti­a­tions that are on­go­ing are very in­ter­est­ing for Venezuela from two an­gles and it could be a win-win for both coun­tries. The main an­gle is that they will use this as the hook for Venezuela to get the Eu­ro­peans in­ter­est­ed in push­ing the Unit­ed States to make the sanc­tions more flex­i­ble. The Eu­ro­peans are in­ter­est­ed in the gas that will be ex­port­ed to T&T and its po­ten­tial for on­shore us­es. Pres­i­dent Maduro has this cov­ered in that it is geo-po­lit­i­cal­ly im­por­tant.

“The sec­ond is­sue is the amount of mon­ey that he might get. I be­lieve that he be­lieves that he can get more out of it. The deal will even­tu­al­ly hap­pen as it is just a mat­ter of Pres­i­dent Maduro get­ting some­thing more,” Monal­di told the Sun­day Busi­ness Guardian.

T&T ur­gent­ly needs new nat­ur­al gas sources in or­der to sup­ply its in­dus­tri­al plants, which are cur­rent­ly op­er­at­ing be­low ca­pac­i­ty.

The En­er­gy Cham­ber of T&T on its web­site in Jan­u­ary said gas from this project will pro­vide nat­ur­al gas for the down­stream petro­chem­i­cal and LNG sec­tors in Trinidad, help­ing se­cure jobs, for­eign ex­change and con­tin­ued busi­ness op­por­tu­ni­ties.

At the end of Ju­ly, Prime Min­is­ter Dr Kei­th Row­ley in an in­ter­view, in the lo­cal me­dia, said that ne­go­ti­a­tions over the Drag­on Gas field had reached a stum­bling block.

“The Venezue­lans have not ac­cept­ed the terms laid down by the Amer­i­cans. That is the long and short of it. We fought very hard to get the Amer­i­cans to give us a carve-out, which is to al­low us to treat with PDVSA with­out break­ing the sanc­tions; we even­tu­al­ly won that bat­tle but they put a con­di­tion on it that the Venezue­lans as of now have not ac­cept­ed. We’re still talk­ing on both sides; we’re still ne­go­ti­at­ing,” Row­ley re­vealed.

The Drag­on gas field project is lo­cat­ed on the Venezue­lan side of the north-west­ern mar­itime bor­der with T&T. It was sched­uled to start pro­duc­tion over a decade ago. How­ev­er, sanc­tions by the US ad­min­is­tra­tion, as well as lack of cap­i­tal, de­layed the pro­duc­tion start of the field.

The li­cence al­lows T&T to un­der­take busi­ness re­lat­ed to the Drag­on field with Venezuela’s heav­i­ly sanc­tioned state-run oil com­pa­ny PDVSA, which is the own­er of the nat­ur­al gas field.

Eu­ro­pean loan

Monal­di al­so re­ferred to a pos­si­ble loan from the Eu­ro­pean Union (EU) that could as­sist Venezuela in trans­port­ing gas to T&T and then send it on to the EU.

In Ju­ly, US Busi­ness news web­site Bloomberg re­port­ed that Venezuela is in ear­ly-stage talks with the EU on a US$1.5 bil­lion plan to cap­ture its methane emis­sions and ex­port them to the bloc as nat­ur­al gas with the help of Ital­ian multi­na­tion­al Eni SpA and Span­ish com­pa­ny Rep­sol SA.

The project would use a por­tion of the EU’s Glob­al Gate­way Ini­tia­tive funds to gath­er emis­sions from Venezuela’s idle oil wells and de­te­ri­o­rat­ing in­fra­struc­ture.

That gas would be sent to T&T to be liq­ue­fied and shipped on to Eu­rope bol­ster­ing the EU’s gas sup­plies amidst Rus­sia’s war with Ukraine.

Monal­di said Venezuela’s Gov­ern­ment is us­ing the Eu­ro­peans as a lever­age to pres­sure the Amer­i­cans to con­cede more dur­ing the ne­go­ti­a­tions.

“The Eu­ro­peans are lob­by­ing very hard for the Unit­ed States to do what­ev­er is need­ed to get the Drag­on project so as to get LNG ex­port­ed to Eu­rope.

Joseph Bor­rell who is the EU’s Foriegn Af­fairs Rep­re­sen­ta­tive, said Venezuela is a big part of the so­lu­tion to the prob­lem of sup­plies of nat­ur­al gas in Eu­rope over the next few years.

“He was talk­ing about the Dr­gaon project but al­so about the col­lec­tion of the gas be­ing flared from fields in Venezuela. With the loan they are talk­ing about, it is to get the gas to T&T. So the Eu­ro­peans are lob­by­ing hard to get the Unit­ed States to have a nat­ur­al gas pol­i­cy on Venezuela that’s more flex­i­ble. The Eu­ro­peans care more about nat­ur­al gas than oil.”