2023-11-20 21:13:11
Venezuela is close to approving a license allowing Shell and the National Gas Company of Trinidad and Tobago to exploit a promising offshore natural gas field and export its production to the Caribbean country, two people said close to the file.
Trinidad and Tobago Prime Minister Keith Rowley confirmed on Monday that the parties were negotiating the license and added that Energy Minister Stuart Young was expected to travel to Caracas this week.
The license might set in motion a long-term effort by Trinidad to increase its exports of petrochemicals and gas processing, while providing Venezuela with an additional source of much-needed liquidity.
The two countries have been seeking to accelerate cross-border energy development since the United States issued a two-year permit for development of the Dragon field in January.
Venezuela, which holds Latin America’s largest gas reserves, and its neighbor Trinidad, the region’s largest liquefied natural gas (LNG) exporter, would complement each other’s gas production and export needs .
The two countries are discussing a 25-year exploration and production license for the Dragon field, which contains up to 4.2 trillion cubic feet of gas and is in Venezuelan waters near the maritime border between the two countries.
Some terms still need to be agreed, but if all goes well, an agreement might be signed in the coming days.
Shell would operate the project with a 70% interest and NGC of Trinidad would hold the remaining 30%, under the proposed terms.
Venezuelan state oil company PDVSA, which discovered Dragon’s reserves and paid for existing infrastructure, would not have a stake in the project, but Venezuela would receive money or a portion of the gas production in the form of Royalties.
In 2013, PDVSA finished testing gas production at Dragon, but the field was never commercially active due to the company’s lack of capital and, more recently, U.S. sanctions.
Last month, the United States temporarily eased sanctions on Venezuela and amended the permit for Dragon, allowing Caracas to receive revenue from gas sales. Since then, negotiations have progressed more quickly, a third person said.
Shell declined to comment. NGC referred questions regarding the negotiations to Trinidad’s energy ministry. The ministry, PDVSA and Venezuela’s oil ministry did not respond to requests for comment.
Mr Rowley also said he hoped a long-running dispute between Venezuela and its neighbor Guyana over potentially oil-rich territory would not have implications for projects with Trinidad. .
“I would not want relations between Venezuela and Guyana to reach a point where consequent actions would harm us,” said the prime minister.
VOLUMES, PRICES, OILPINES
The proposed license would allow an initial volume of 300 million cubic feet per day (mcfd) of Venezuelan gas to be sent to Trinidad for LNG production, starting in late 2026, and an additional 50 mcfd to petrochemical plants, the companies said. persons concerned.
Trinidad and Tobago has the capacity to process 4.2 billion cubic feet per day (bcfd) into LNG, petrochemicals and electricity, but its gas production is around 2.7 bcfd.
The lack of gas led to the closure of one of its LNG processing units.
The parties agreed in principle on a price that would allow gas to cross the border at less than $3 per mcf, according to the sources.
PDVSA insisted that a signing bonus of around $65 million be paid up front. But Shell and NGC want to tie any payment to certain milestones, such as the start of gas production, the sources added.
The parties are considering two separate lines to transport the gas: a line partially built by PDVSA to Guiria, on Venezuela’s east coast. A second line would connect to Shell’s Hibiscus field in Trinidad.
If the parties agree that some gas will pass through Guiria, a short additional pipeline from Guiria to Point Fortin, where Trinidad’s LNG plants are located, may be necessary.
This option would allow Venezuela to process gas on its coastline, retaining what it needs to supply the domestic market and possibly exporting gaseous liquids in the future. However, the addition of a new line might increase the time needed for the project to start producing gas to five years, instead of the hoped-for three years.
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