Director, Latin American Energy Program, Rice University’s Baker Institute for Public Policy, Dr Francisco Monaldi is of the view that Venezuela’s new minister Pedro Tellechea, appointed in March is “serious” about continuing negotiations with T&T over the offshore Dragon Gas field.
Monaldi was making reference to statements made by Energy Minister Stuart Young last week about T&T’s wish for the United States to grant more concessions to T&T and Venezuela during the negotiations.
Speaking to a reporter on June 1 at the Energy International Summit of the Association of International Negotiators in Miami, United States, Young said there needs to be more discussions among the United States, Venezuela and T&T on the Dragon Gas Field Project.
“T&T has become a victim of the geopolitics surrounding our nearest neighbour (Venezuela) and unfortunately, we are experiencing the collateral damage from this,” Young said.
Monaldi said Tellechea has begun to “take action.”
“Minister Tellechea is taking significant action. As always, there is the rhetoric of big plans to increase oil production but you can see, for example, the decision to allow ENI and Repsol to export natural gas liquids from their off shore project and the announcement that this is a first step to potentially develop an LNG project on the eastern side of Venezuela. This project in Venezuela’s Paraguana Peninsula is a very interesting move. I am not sure that it would happen but the needle is starting to move in terms of getting these companies to stay. That signals to me that he is really interested in moving ahead in the project with T&T,” Monaldi said in a statement to the Business Guardian.
Venezuela and T&T are expected to meet later this month to continue negotiations.
In January 2023, T&T secured a two-year licence from the United States Government to commence the development of the long-stalled Dragon project.
The Dragon project 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.
As per the estimates, the PDVSA-owned Dragon field has up to 4.2 trillion cubic feet of natural gas.
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 as a result of the sanctions against Venezuela, which preclude the country or its state-owned companies from receiving cash payments in US dollars.
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 the Dragon field, which is north of the most westerly tip of the Chaguaramas peninsula in Venezuelan waters.
Monaldi said that the Venezuelan side wants to move ahead in its discussions with T&T but not without getting concessions in exchange whether it be cash payments or other valuable returns.
“The thing is that they probably feel that the pressure by the Europeans and the potential interest by the United States in helping the LNG market that it might be possible to get a better deal in terms of cash payments and as we know that has been signalled and announced by T&T. And it makes sense with what Tellechea has been signalling in other areas. That is the willingness of Venezuela to move ahead but trying to get something in exchange. In the case of ENI and Repsol the Venezuelans are trying to invest in trying to further expand production and use it as an opportunity to earn hard currency.”
He added that in terms of increasing oil production, the Venezuelan Government said it wants to increase to 1 million barrels of oil in 2023 and although that target may not be achieved, at least the corruption scandals seem to be a thing of the past.
“However, it is very unlikely that this will happen but there is no doubt that Venezuela’s new Petroleum Minister is trying to move things around to help Chevron, ENI, Repsol and others to get production up. As for the corruption scandals, it seems that all has been normalised.”