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Friday, May 9, 2025

Expert: Dragon Gas deal will benefit both T&T and Venezuela

by

Raphael John-Lall
792 days ago
20230309
Venezuela's Executive Vice President, Delcy Rodríguez, warmly greets Trinidad and Tobago's Minister of Energy and Energy Industries, Stuart Richard Young, before their meeting on Monday 6 February 2023.

Venezuela's Executive Vice President, Delcy Rodríguez, warmly greets Trinidad and Tobago's Minister of Energy and Energy Industries, Stuart Richard Young, before their meeting on Monday 6 February 2023.

DELCY RODRIGUEZ/TWITTER

Di­rec­tor of the Latin Amer­i­can En­er­gy Pro­gram at Rice Uni­ver­si­ty’s Bak­er In­sti­tute for Pub­lic Pol­i­cy, Dr Fran­cis­co Monal­di be­lieves that T&T and Venezuela will both ben­e­fit when they be­gin to ex­ploit the Drag­on Gas Field but there are many hur­dles that they need to over­come be­fore this hap­pens.

For many years both coun­tries have been talk­ing about ex­plor­ing the cross-bor­der gas re­serves but noth­ing con­crete has hap­pened as yet.

In 2007, then Venezue­lan Pres­i­dent Hugo Chávez and then T&T’s Prime Min­is­ter Patrick Man­ning signed an ac­cord to uni­fy two off­shore re­serves of nat­ur­al gas.

“Venezuela is in a tough po­si­tion based on a com­bi­na­tion of things. They don’t have an­oth­er out­let for their nat­ur­al gas at this point. They were sup­posed to de­vel­op the Drag­on Field close to the Hi­bis­cus Field be­ing op­er­at­ed by Shell on the Trinida­di­an side.

“Venezuela has not com­plet­ed de­vel­op­ment of the field or the in­fra­struc­ture to bring it to the do­mes­tic mar­ket,” he told Guardian Me­dia in an in­ter­view from Rice Uni­ver­si­ty, Hous­ton in the Unit­ed States.

Giv­en the dif­fi­cult sit­u­a­tion Venezuela is in, he said the Venezue­lan Gov­ern­ment is look­ing for op­por­tu­ni­ties to mon­e­tise this field.

“This re­quires sig­nif­i­cant in­vest­ment be­fore pro­duc­tion starts. So the Venezue­lan Gov­ern­ment needs T&T. T&T has the At­lantic LNG trains that are not at full ca­pac­i­ty.”

The US Trea­sury De­part­ment on Jan­u­ary 23 grant­ed T&T a li­cense al­low­ing it to im­port Venezue­lan gas and con­vert it in­to Liq­ue­fied Nat­ur­al Gas (LNG). The Venezue­lan-owned Drag­on gas field con­tains 4.2 tril­lion cu­bic feet.

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

In Jan­u­ary, Prime Min­is­ter Dr Kei­th Row­ley in­di­cat­ed that the pay­ment of gas to Venezuela could be made through hu­man­i­tar­i­an sup­plies such as med­i­cine and food, due to sanc­tions.

Wash­ing­ton last year au­tho­rised US and Eu­ro­pean firms to re­sume tak­ing Venezue­lan crude oil on the con­di­tion no funds be paid to Venezuela. The Unit­ed States au­tho­rised T&T to im­port gas from a Venezue­lan off­shore field but barred cash from chang­ing hands.

Giv­en the po­si­tion of the Unit­ed States, in Feb­ru­ary, the Pres­i­dent of Venezuela, Nicolás Maduro lashed out at US li­cences bar­ring com­pa­nies do­ing busi­ness with sanc­tioned Venezue­lan state firms from pay­ing cash to his ad­min­is­tra­tion.

“They tell a coun­try it has per­mis­sion to ne­go­ti­ate with Venezuela, but it can­not pay in dol­lars or any form of cash. It must pay with food or prod­ucts,” Maduro said in a broad­cast. “That is coloni­sa­tion.”

Hu­man­i­tar­i­an Pay­ment

Monal­di com­mend­ed T&T for go­ing to the Unit­ed States be­fore it be­gan ne­go­ti­a­tions with Venezuela.

“The T&T Gov­ern­ment was very smart for go­ing to the US and men­tion­ing the is­sues that the Amer­i­cans are con­cerned about like the cri­sis in Eu­rope and in the Caribbean be­cause of the high price of LNG. It’s a per­fect mar­riage with T&T need­ing the gas and Venezuela hav­ing the gas.”

On the is­sue of how T&T will pay Venezuela, he called the li­cence that the Unit­ed States is­sued to T&T “re­stric­tive and lim­it­ed.”

“It will not al­low pay­ments of cash to the Venezue­lan Gov­ern­ment. Any deal will re­quire the pay­ment of roy­al­ty to the Venezue­lan side. This will be done via hu­man­i­tar­i­an aid and the de­tails of how that will be ac­com­plished have to ne­go­ti­at­ed. The Of­fice of For­eign Af­fairs Con­trol (OFAC) in the US must al­low the li­cence to pro­ceed. It’s a com­plex ne­go­ti­a­tion.”

He added that pay­ing Venezuela us­ing hu­man­i­tar­i­an goods will be com­pli­cat­ed but so­lu­tions must be found.

“It’s com­plex as how they will de­liv­er that. T&T in the past has de­liv­ered hu­man­i­tar­i­an aid to Venezuela. Med­ical equip­ment was de­liv­ered in the past. Liq­ue­fied Pe­tro­le­um Gas (LPG) is need­ed in Venezuela and maybe it can be im­port­ed through T&T. It must be some­thing that OFAC con­sid­ers to be hu­man­i­tar­i­an aid. Of course, Venezuela does not like that idea as they want cash for their roy­al­ties. So far the li­cence to Chevron has been lim­it­ed.”

Once talks are com­plet­ed, he spoke about how it will ben­e­fit Venezuela.

“This will mean $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 for in cash but it’s the first op­por­tu­ni­ty to mon­e­tise gas re­sources that have been in place since the 1990s. It has nev­er been de­vel­oped.”

Venezue­lan Views

The Man­ag­ing Part­ner of Gas En­er­gy for Venezuela, An­tero Al­vara­do in an in­ter­view with Venezue­lan ra­dio sta­tion Union Ra­dio point­ed out that for Petróleos de Venezuela (PDVSA) this li­cense to ex­tract gas rep­re­sents many chal­lenges and it will take time to ex­port gas to T&T.

“This re­quires mon­ey, peo­ple, time and we don’t know if it’s a pri­or­i­ty. Then, it re­mains as a pend­ing task who will be the vis­i­ble face of the Venezue­lan side that is re­spon­si­ble for pay­ing tax­es and roy­al­ties. This is not so easy and fast, it will not hap­pen in the next three years,” he said.

How­ev­er, he clar­i­fied that the pri­vate li­cense for T&T to ex­port Venezue­lan gas is not a re­lax­ation in the pol­i­cy of the Joe Biden Gov­ern­ment to­wards Venezuela.

He gave the view that the ex­port of Venezue­lan gas to T&T rep­re­sents a great op­por­tu­ni­ty for the coun­try.

Venezue­lan jour­nal­ist An­gel González in an ar­ti­cle for Venezue­lan news­pa­per El Ul­ti­mas Noti­cias re­ferred to the move by the US to al­low T&T to ex­plore the gas fields with Venezuela, a small but im­por­tant step.

“In any case, this means a new small open­ing, a new ‘tear’ in the strait­jack­et that the White House has im­posed on Venezuela. It is ev­i­dent that Wash­ing­ton’s pun­ish­ment not on­ly harms Venezue­lans, but al­so oth­er coun­tries, such as the Caribbean is­lands, for ex­am­ple. But on­ly when Eu­rope needs gas, due to the block­ade im­posed on Rus­sia, does the US make these move­ments.”

Venezuela’s Hu­man­i­tar­i­an Needs

Econ­o­mist and re­tired di­rec­tor at In­sti­tute of In­ter­na­tion­al Re­la­tions, Uni­ver­si­ty of the West In­dies (UWI) Dr An­tho­ny Gon­za­les who gave a lo­cal per­spec­tive told Guardian Me­dia that ne­go­ti­a­tions will de­pend on what Venezuela’s Gov­ern­ment thinks its needs are.

“I can­not say what may be ac­cept­able to the Venezue­lan Gov­ern­ment. Hu­man­i­tar­i­an aid and oth­er pay­ment meth­ods as pay­ing Venezue­lan debt could be re­al­is­tic de­pend­ing on the needs of the Venezue­lan Gov­ern­ment at the time of ne­go­ti­a­tions.”

He said that talks about ex­plor­ing the cross-bor­der gas re­serves are not new so he ex­pects that in­evitably ne­go­ti­a­tions will be suc­cess­ful.

“In 2018, Venezuela agreed to sell T&T the gas so one can ex­pect that ne­go­ti­a­tions will be suc­cess­ful un­less the Venezue­lans change their minds. The ne­go­ti­a­tions seem to de­pend on more what the US Gov­ern­ment will do in two years and what de­mo­c­ra­t­ic con­ces­sions the Venezue­lans make that would sat­is­fy the US. It is still risky.”

Min­is­ter of En­er­gy and En­er­gy In­dus­tries Stu­art Young is ex­pect­ed to re­turn to Cara­cas, Venezuela, soon to con­tin­ue dis­cus­sions on the Drag­on Gas Field deal.

Speak­ing at the post-Cab­i­net press brief­ing at the Diplo­mat­ic Cen­tre in Feb­ru­ary hours af­ter re­turn­ing from sim­i­lar dis­cus­sions in Cara­cas, Young said a del­e­ga­tion of ex­perts will ac­com­pa­ny him to con­tin­ue those dis­cus­sions.

“I would hope­ful­ly be lead­ing a team and a del­e­ga­tion of ex­perts and tech­ni­cal per­sons in three weeks’ time, the sec­ond week of March, back to Cara­cas for us to con­tin­ue those con­ver­sa­tions and ne­go­ti­a­tions that are set on the right path­way for us to be able to joint­ly de­vel­op the Drag­on Gas Field and hope­ful­ly bring that gas in­to pro­duc­tion in Trinidad and To­ba­go, as well as in Venezuela,” Young said.


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