Shell Bold Venture: Amidst diplomatic negotiations and regional energy dynamics, Shell and the National Gas Company of Trinidad and Tobago are on the cusp of a groundbreaking venture. Reliable sources reveal that Venezuela is on the verge of approving a license, allowing these entities to develop an offshore natural gas field and export its production to the Caribbean nation.
Prime Minister Keith Rowley of Trinidad and Tobago confirmed ongoing negotiations for the license. Energy Minister Stuart Young is anticipated to visit Caracas this week, potentially setting in motion an extensive effort to bolster gas processing and petrochemical exports for Trinidad. Simultaneously, this move could offer Venezuela a valuable source of additional cash.
The collaboration aims to expedite cross-border energy development, with the United States having issued a two-year authorization in January for the development of the Dragon field. This offshore gas field holds immense promise, boasting up to 4.2 trillion cubic feet of gas and strategically positioned in Venezuelan waters near the maritime border between the two nations.
While some terms are yet to be settled, sources suggest that a deal could be signed in the coming days. According to proposed terms, Shell would operate the project with a 70% stake, while Trinidad’s National Gas Company (NGC) would hold the remaining 30%. Notably, Venezuela’s state-run oil firm PDVSA, the entity that discovered Dragon’s reserves and financed existing infrastructure, would not have a stake in the project. Instead, Venezuela is set to receive either cash or a portion of gas production as royalties.
The Dragon field underwent testing in 2013, but commercial activity has been stymied by PDVSA’s financial constraints and, more recently, U.S. sanctions. However, the recent temporary easing of sanctions by the U.S., allowing Venezuela to receive proceeds from gas sales, has catalyzed negotiations.
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The proposed license is expected to enable an initial volume of 300 million cubic feet per day of Venezuelan gas to be directed to Trinidad for LNG production, starting in late 2026. Additionally, an extra 50 million cubic feet per day would be allocated to petrochemical plants. Trinidad and Tobago, as the largest liquefied natural gas (LNG) exporter in the region, stands to benefit significantly from this arrangement.
While the lack of gas has led to the closure of one of Trinidad’s LNG processing units, the proposed license could rejuvenate its gas processing and petrochemical industry. The parties have reportedly agreed in principle to a price that would land gas across the border at less than $3 per thousand cubic feet.
However, some details are yet to be finalized, such as a signature bonus. PDVSA is pushing for a $65 million upfront payment, but Shell and NGC prefer tying any payment to specific milestones, such as the commencement of gas production.
The transportation of gas is another consideration. Two separate lines are under discussionone built by PDVSA to Guiria on Venezuela’s eastern coast and another connecting to Shell’s Hibiscus field in Trinidad. If an agreement is reached for some of the gas to pass through Guiria, an additional short pipeline linking Guiria to Point Fortin may be necessary.
This venture, if successful, could not only reshape energy alliances in the region but also foster economic shifts and cooperation between Venezuela and Trinidad and Tobago. The proposed license signifies a significant step toward utilizing the Dragon field’s potential and addressing the energy needs of both nations. As negotiations progress, the intricate dance between geopolitics and energy ambitions continues to unfold, with Shell and NGC playing pivotal roles in this strategic cross-border initiative.
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