Mak­ing mul­ti-mil­lion dol­lar in­vest­ment de­ci­sions is not easy and the process gen­er­al­ly takes time to ex­am­ine all the iden­ti­fi­able risks. Many risks must be eval­u­at­ed be­fore a fi­nal in­vest­ment de­ci­sion is con­clud­ed. These risks can be grouped in­to five main cat­e­gories: tech­ni­cal, eco­nom­ic, fi­nan­cial, op­er­a­tional and po­lit­i­cal.

Each cat­e­go­ry of risks can be sub­di­vid­ed in­to in­di­vid­ual risk ar­eas. Eval­u­at­ing these risks is more com­pli­cat­ed than most peo­ple imag­ine. It in­volves eval­u­at­ing each risk cat­e­go­ry un­der sev­er­al dif­fer­ent sce­nar­ios and at dif­fer­ent stages in the life of a project. Eval­u­at­ing po­lit­i­cal risk is a very thorny is­sue as the Venezuela sit­u­a­tion demon­strates. The Biden ad­min­is­tra­tion re­laxed the sanc­tions regime against Venezuela to en­cour­age the Maduro regime to fa­cil­i­tate free and fair elec­tions to al­low regime change by the bal­lot box.

T&T is in­vest­ed in the out­come of the elec­tions as it has been at­tempt­ing to fa­cil­i­tate ac­cess to Venezue­lan gas. The re­lax­ation in the US sanc­tions regime al­lowed GORTT to ob­tain a two-year ex­emp­tion from the US Of­fice of For­eign As­sets Con­trol (OFAC) which ad­min­is­ters the USA’s sanc­tions regime. The ex­emp­tion al­lowed the Shell/NGC joint ven­ture to ob­tain an ex­plo­ration and pro­duc­tion li­cence for the Drag­on gas field from the Venezue­lan Gov­ern­ment af­ter many years.

It has emerged that a BPTT/NGC joint ven­ture has al­so been ne­go­ti­at­ing for sim­i­lar ac­cess to Venezuela’s gas re­serves. BPTT and Shell are the ma­jor­i­ty own­ers of At­lantic LNG, and the Na­tion­al Gas Com­pa­ny is a mi­nor­i­ty own­er with a ten per cent share­hold­ing. Fur­ther, Shell and BPTT are re­spon­si­ble for more than 70 per cent of the gas used as feed­stock in in­dus­tri­al pro­duc­tion in T&T. Train 1 is closed, and the oth­er plants are op­er­at­ing well be­low ca­pac­i­ty.

The ne­go­ti­a­tions for ac­cess to Venezuela gas in­di­cate an ur­gency to ob­tain ad­di­tion­al gas to sup­ple­ment pro­duc­tion in T&T. The joint ven­ture per­cent­ages (70 per cent and 75 per cent re­spec­tive­ly) in­fer that Shell and BPTT’s pri­or­i­ty is to main­tain AL­NG’s out­put. It al­so sug­gests that there is con­cern about the re­li­a­bil­i­ty of fu­ture do­mes­tic nat­ur­al gas pro­duc­tion.

Drilling for gas in deep­er wa­ters in T&T may not be fea­si­ble giv­en the re­luc­tance of the en­er­gy ma­jors to bid for ad­di­tion­al acreage in suc­ces­sive bid rounds. Nei­ther is im­port­ing LNG to keep the petro­chem­i­cal sec­tor alive. There­fore, get­ting nat­ur­al gas from Venezuela is a strate­gic im­per­a­tive. This is the con­text ex­plain­ing T&T’s in­ter­est in the con­duct and out­come of Venezuela’s elec­tions which took place on Ju­ly 28.

Pres­i­dent Maduro seemed con­fi­dent of vic­to­ry even though the Op­po­si­tion ap­peared to be ahead in the polls. How­ev­er, the post-elec­tion out­come and the fall­out were en­tire­ly pre­dictable. By this, I mean that both the Op­po­si­tion and the in­cum­bent have claimed vic­to­ry and in­ter­na­tion­al ob­servers have in­di­cat­ed that the elec­tions were not free and fair. This is noth­ing new as this has been the po­si­tion since 2013.

What is new is T&T’s need for Venezuela’s gas. That need, how­ev­er, may not co­in­cide with the geopo­lit­i­cal sit­u­a­tion. The US State De­part­ment re­spond­ed to the an­nounce­ment that Pres­i­dent Maduro had won the elec­tion and ex­pressed its con­cerns over the con­duct of the elec­tion process. Its at­tempt to ob­tain a vote cen­sur­ing Venezuela at the Or­ga­ni­za­tion of Amer­i­can States failed with T&T amongst oth­er Cari­com Amer­i­can States ab­sent.

On Au­gust 1, US Sec­re­tary of State Antony Blinken of­fi­cial­ly de­clared Ed­mun­do González as the win­ner of Venezuela’s pres­i­den­tial elec­tion against Nicolás Maduro “… Giv­en the over­whelm­ing ev­i­dence …” This was the route trav­elled in 2019 when Juan Guaidó, then ro­tat­ing Pres­i­dent of Venezuela’s Na­tion­al As­sem­bly, de­clared him­self Pres­i­dent of Venezuela and had his claim to the pres­i­den­cy recog­nised by the US and sev­er­al oth­er pow­er­ful West­ern gov­ern­ments. The dif­fer­ence this time is that Ed­mun­do González par­tic­i­pat­ed in the pres­i­den­tial cam­paign. It con­firms that the US is im­placa­bly op­posed to Maduro.

What is go­ing to hap­pen next? Will the OFAC li­cences be with­drawn, and tighter sanc­tions im­posed on Venezuela? How will the US elec­tions in No­vem­ber al­ter the sit­u­a­tion? These are ear­ly days. There is still time for po­si­tions to evolve. This coun­try’s eco­nom­ic in­ter­est re­quires an ear­ly res­o­lu­tion to this process, but it has lit­tle lever­age to per­suade the Biden ad­min­is­tra­tion to ex­tend the li­cence. Biden’s ad­min­is­tra­tion cal­cu­lat­ed that re­lax­ing the sanc­tions regime could in­duce the Maduro regime to hold a free and fair elec­tion.

Sto­ries have emerged that there were sweet­en­ers to fa­cil­i­tate Maduro’s ex­it and that of key mem­bers of his team. That cal­cu­la­tion has back­fired. The log­i­cal re­sponse would be the reim­po­si­tion of sanc­tions. This would end BPTT and Shell’s gam­bit for the time be­ing. The re­sult of the US elec­tion in No­vem­ber might bring a dif­fer­ent cal­cu­la­tion. Geopo­lit­i­cal risk is the key to the suc­cess or fail­ure to ac­cess Venezuela’s gas fields. Over­com­ing this risk is ex­ceed­ing­ly dif­fi­cult.

T&T needs more gas if AL­NG and the petro­chem­i­cal sec­tor are to be kept alive and eco­nom­i­cal­ly vi­able. Not much can be achieved with­in the two-year OFAC ex­emp­tion With­out ad­di­tion­al do­mes­tic gas pro­duc­tion the out­look for both sec­tors is dif­fi­cult. For the time be­ing it does not look like this Drag­on will dance. What is next?

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