Russia’s investment in Venezuela’s gas sector will not affect T&T’s energy relationship with that South American country, says energy consultant, Tony Paul.
“There are several fields out there, and Trinidad and Tobago’s Dragon field is different from the fields that the Russians are investing in. Also, Venezuela has lots, and lots of gas and Trinidad and Tobago certainly could not take all of it,” he said.
In early December, Venezuela awarded licences to a unit of Russian oil major Rosneft to develop two offshore gas fields. Venezuelan President Nicolas Maduro signed the deal during a visit to Venezuela by Rosneft CEO Igor Sechin.
Under the agreement, which is valid for 30 years, wholly-owned Rosneft unit Grupo Rosneft will become the operator of the Patao and Mejillones offshore gas fields, Rosneft said.
President Maduro, who met with President Vladimir Putin in Moscow earlier this month, said Russia has agreed to invest US$5 billion to improve Venezuelan oil production—much of which goes to Russia’s export customers—and IS$1 billion in gold mining. Separate contracts were signed to supply Venezuela with 600,000 tons of Russian wheat and to modernise and maintain its Russian-made weaponry.
According to a report in the Washington Post yesterday, in exchange for modest loans and bailouts over the past decade, Russia now owns significant parts of at least five oil fields in Venezuela, along with 30 years’ worth of future output from two Caribbean natural-gas fields.
Venezuela has also signed over 49.9 per cent of Citgo, its wholly owned company in the United States as collateral to Rosneft for a reported US$1.5 billion.
Earlier this year, Prime Minister Dr Keith Rowley and President Maduro signed a historic gas deal which will allow T&T to access gas from Venezuela’s Dragon Gas Field.
Paul said Venezuela is diversifying its portfolio and it is easy for them to monetise their considerable gas resources.
“Venezuela needs access to revenue. They are constrained by how much production they could have in terms of restriction with OPEC. They have been having trouble with oil production.
“Even if they were to get oil production up, they would hit a ceiling set by OPEC. But natural gas production is not in any way impaired by OPEC limitations. It is an easy way to get hard currency for Venezuela. That is why they also want to get gas to T&T. It is a benefit for them as well,” he explained. Paul added that the Russians have been looking for ways to get into the LNG market.
“Russia is a big gas producer and is a leader in the gas producing forum and they export a lot of gas. It is obvious that they would get into the LNG market as part of their portfolio management strategy. It is not surprising that the Russians are working in this part of the world. The Russians sell gas to Europe through a pipeline. They also have pipelines to China.”