Trinidad and Tobago plans to request an extension for a U.S. license allowing Shell and the National Gas Company to develop the Dragon natural gas project in Venezuela. This extension is necessary to initiate production post their investment decision expected this year. The project aims to supply Trinidad with gas, contributing to its energy needs and benefiting Venezuela’s economy amid U.S. sanctions.
Trinidad and Tobago intends to request an extension from the U.S. administration for a license permitting Shell and the National Gas Company (NGC) to advance a significant gas project in Venezuela. This license, initially issued in early 2023, allows the companies to prepare for the Dragon natural gas project, which is expected to supply Trinidad with gas by 2027.
The U.S. government modified the license in 2023, allowing payments in hard currency or kind to Venezuela and its state-owned company PDVSA for gas supplies, extending its duration to October 2025. An extension is necessary for Shell and the NGC to commence production post their final investment decision this year.
The Dragon project’s anticipated initial output is approximately 200 million cubic feet per day. U.S. sanctions prohibit revenue payments to entities within the Venezuelan oil and gas sector, which is regulated by PDVSA, necessitating U.S. licenses for compliance.
Prime Minister Keith Rowley stated that Trinidad will inform Washington about the significance of U.S. licenses for the development of gas projects with Venezuela to ensure regional energy security. Efforts have been made to analyze the site, and Shell has confirmed the existence of at least 4.2 trillion cubic feet of gas in the Dragon field.
Shell successfully conducted a seabed survey and is currently determining the number and placement of wells to be drilled, along with the pipeline route to Trinidad and the subsea tieback. Both Shell and NGC are collaborating closely with local and Venezuelan officials as they progress with the project.
Trinidad requires fuel to enhance its liquefied natural gas and petrochemical industries, while Venezuela aims to gain a cash flow from gas exports. U.S. sanctions, however, have placed restrictions on Venezuelan President Nicolás Maduro’s access to revenues, amidst claims of illegitimacy regarding the sanctions.
Energy Minister Stuart Young indicated that the Dragon project’s production could be larger than the initially proposed output. If negotiations yield favorable pricing, the Dragon field could generate substantial revenue, bringing in approximately $30 million monthly with a portion directed to Venezuela as royalty payments.
In conclusion, Trinidad and Tobago is actively pursuing an extension of a U.S. license that would enable Shell and the National Gas Company to develop the Dragon gas project in Venezuela. This project is poised to significantly benefit both Trinidad’s energy needs and Venezuela’s economy. The Prime Minister’s commitment to engage with the U.S. over this matter underscores the project’s importance for regional energy security. The collaboration between the two nations aims to navigate the challenges posed by U.S. sanctions while leveraging substantial natural gas reserves.
Original Source: www.oedigital.com
