“There’s many a slip twixt the cup and the lip” is an Eng­lish proverb that im­plies that many things can go wrong even when the out­come ap­pears cer­tain. The more com­plex the project, the greater the num­ber of mov­ing parts, and the greater the lev­el of un­cer­tain­ty, which in­creas­es the prob­a­bil­i­ty of er­ror.

This is es­pe­cial­ly true of projects in­volv­ing the ex­trac­tion and pro­cess­ing of fos­sil fu­els which are ex­pen­sive to un­der­take. The oil and gas sec­tor is one of the largest in­dus­tries in the world and its es­ti­mat­ed an­nu­al rev­enue is in the mid-tril­lions of USD.

Be­cause en­er­gy sec­tor projects in­volve “big mon­ey”, plan­ning, de­vel­op­ing, and build­ing fa­cil­i­ties are tasks that are done in de­tail.

Sim­ply put, min­er­al rights flow from the own­er­ship of land and de­pend on the type of land ti­tle. No one owns the sea, but coun­tries can claim an ex­clu­sive eco­nom­ic zone and any min­er­al rights as­so­ci­at­ed there­with are vest­ed in the State.

Hence, the State can seg­re­gate ac­cess in­to blocks and grant rights to ex­plore and ex­tract the min­er­al prop­er­ties as­so­ci­at­ed with each block. The State can use any mech­a­nism to award these blocks to com­pe­tent par­ties. In the T&T case, it has been the prac­tice to award min­er­al rights to oil com­pa­nies by way of a com­pet­i­tive process or “bid round”, a process used by oth­er coun­tries as well.

 Min­er­al rights are award­ed to ex­tract oil and gas by the terms of the lease for the par­tic­u­lar par­cel of sea acreage (block) for a de­fined pe­ri­od dur­ing which time the lease­hold­er has cer­tain rights and du­ties as set out in the lease. There can on­ly be a project if one has a le­gal right to ex­ploit an iden­ti­fied area/block.

For ex­am­ple, the right to ex­tract oil or gas re­sources from the Drag­on field is owned by Petroleos de Venezuela (PDVSA) Venezuela’s na­tion­al oil com­pa­ny. No op­er­a­tor can ex­tract oil or gas un­til there is a de­fined le­gal arrange­ment with PDVSA.

Ac­cord­ing­ly, there can be no project if there is no le­gal right to ex­tract the gas. There may have been dis­cus­sions, but there is no award to any op­er­a­tor based in T&T or as­so­ci­at­ed with T&T’s in­ter­ests. But the award of ex­trac­tion rights is on­ly the cup. Bring­ing the gas on­shore is get­ting the cup to the lip has many de­tails that re­quire the res­o­lu­tion and agree­ment.

While there is a clear need for ad­di­tion­al gas to fa­cil­i­tate the op­er­a­tion of the petro­chem­i­cal plants in Pt Lisas and the LNG Trains in Pt Fortin, oth­er mat­ters must be ra­tio­nalised, such as the tech­ni­cal, fi­nan­cial, and eco­nom­ic fea­si­bil­i­ty to be re­solved as well as the le­gal and oth­er agree­ments.

These are weighty mat­ters that take time to ne­go­ti­ate and are cod­i­fied in the nec­es­sary le­gal doc­u­men­ta­tion.

The eas­i­est of these is the tech­ni­cal fea­si­bil­i­ty which makes ac­cess to Drag­on Field so at­trac­tive. Drag­on Field is close by and needs on­ly 17 kilo­me­tres of pipeline to be laid to the near­est plat­form which is op­er­at­ed by Shell.

The rel­a­tive prox­im­i­ty to a known gas field with proven re­serves makes the prospect in­tu­itive­ly ap­peal­ing. It is rel­a­tive­ly easy to ac­cess phys­i­cal­ly. The hard part is on what terms and con­di­tions and at what price is the gas to be sup­plied by PDVSA?

It is easy to as­sume that the tech­ni­cal and en­gi­neer­ing de­tails are sim­ple to re­solve. The pre­sump­tion is that Venezuela needs mon­ey bad­ly be­cause of its econ­o­my’s poor per­for­mance and the ab­sence of for­eign di­rect in­vest­ment in the en­er­gy sec­tor be­cause of US sanc­tions. How­ev­er, this does not make Venezuela a pushover in ne­go­ti­a­tions. In­deed, Venezuela has made it clear that it wants a high price for ac­cess to its gas fields re­gard­less of sanc­tions. That is T&T’s prob­lem not Venezuela’s. It is al­ready os­tracised by US sanc­tions and whilst the Maduro regime may pre­fer to have the sanc­tions lift­ed it is not yet ready to bend.

Com­mer­cial con­tracts are long-term arrange­ments some­times cov­er­ing 20 years or more. A lot can hap­pen in 20 years and the pric­ing mech­a­nisms built in­to such arrange­ments will af­fect the fi­nan­cial vi­a­bil­i­ty of the project. Mar­kets change. These are mat­ters for com­mer­cial ex­perts to ad­dress. As­sum­ing that these mat­ters can be sat­is­fac­to­ri­ly ad­dressed brings us to the dif­fi­cult geopo­lit­i­cal is­sues that be­dev­il ex­ist­ing ne­go­ti­a­tions.

The ob­vi­ous dif­fi­cul­ty is the ex­is­tence of US sanc­tions against Venezuela. T&T has re­ceived a two-year waiv­er to Oc­to­ber 31, 2025. First, two years may be suf­fi­cient time to con­clude ne­go­ti­a­tions on the com­mer­cial and le­gal as­pects of the ne­go­ti­a­tion, but it is not enough time to re­cov­er the ex­pens­es as­so­ci­at­ed with de­vel­op­ing the field. With­in two weeks of the waiv­er, the Maduro regime in­di­cat­ed that it was un­will­ing to ac­cept the process used to se­lect the unan­i­mous op­po­si­tion can­di­date María Co­ri­na Macha­do break­ing the deal with the US in ex­change for eas­ing sanc­tions. Should the US change its po­si­tion what will be­come of the waiv­er?

Sim­i­lar­ly, Pres­i­dent Maduro, this week re­ject­ed Guyana’s ap­proach to the in­ter­na­tion­al courts re­gard­ing the bor­der dis­pute with Venezuela. This is the con­text of the En­er­gy Min­is­ter’s vis­it to Venezuela next week. What is pos­si­ble?

Mar­i­ano Browne is the Chief Ex­ec­u­tive Of­fi­cer of the UWI Arthur Lok Jack Glob­al School of Busi­ness.