Trinidad and Tobago resume development of a gas field in Venezuela with US approval

Trinidad and Tobago resume development of a gas field in Venezuela with US approval
Trinidad and Tobago resume development of a gas field in Venezuela with US approval
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The Government of Trinidad and Tobago has obtained US approval to resume exploration of a gas field located in Venezuelan territorial waters.

On Tuesday, January 24 (2023), the administration of US President Joe Biden allowed the country in the far south of the Caribbean Sea to proceed with the development of the Venezuelan Dragon field, according to information from the specialized energy platform, according to Reuters.

This step indicates the US administration’s desire to ease some of the sanctions imposed on Venezuela.

The US Treasury Department issued the license at the request of the government of Trinidad and Tobago, and is intended to enhance energy security in the Caribbean.

The license means that Trinidad and Tobago can develop the Dragon gas field with Venezuela’s heavily sanctioned oil company PDVSA.

The results of the talks

Trinidad and Tobago Prime Minister Keith Rowley indicated – during a press conference held in the capital, Port of Spain – that his country expects to obtain 350 million cubic feet of gas per day from the Dragon field.

Trinidad and Tobago Prime Minister Keith Rowley

He explained that his country applied to the United States to obtain the license in mid-2022, and obtained approval after holding discussions with senior US officials, including US President Joe Biden, in addition to keeping communication channels open with Venezuelan President Nicolas Maduro.

He said that there are many conditions that need to be completed, but the parties managed to overcome the most prominent obstacles.

He added that the fields will continue to be owned and operated by PDVSA, but Shell will be the operator of the field.

A US official commented that his country would not allow the Maduro regime to receive any cash payments from the project, while keeping the rest of the sanctions unchanged and applied.

He added that the decision was the result of intense diplomatic efforts between US Vice President Kamala Harris and the leaders of the Caribbean region, in an attempt to ensure energy security in the region and reduce dependence on the resources of other countries, including Russia.

Regarding whether Venezuela cannot receive cash payments, Prime Minister Keith Rowley said that this is not a problem, and payment can be made in several ways.

Dragon gas field

Venezuelan oil company PDVSA has found reserves of 4.2 trillion cubic feet in the Dragon gas field.

Production was expected to start more than a decade ago, but was halted due to a lack of capital and partners, as well as sanctions.

Under US sanctions, companies and governments must obtain permission from the US Treasury Department to cooperate with PDVSA.

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The Biden administration has granted only a few of these authorizations since taking office in January (2021), and most of them are under strict pressure.

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The United States, during the administration of former President Donald Trump, imposed severe economic sanctions on the Venezuelan government in 2019; Alleging that the government led by Nicolás Maduro suppresses freedoms and human rights.

Recent developments mean that all parties involved can proceed with their plans to produce natural gas from Venezuela.

However, the development will not be immediate, as Prime Minister Keith Rowley did not reveal a time frame for the start of the first gas production from the field, as it requires a lot of work, but he confirmed the start at the earliest opportunity, especially since the market is in need of these supplies.

Washington goals

It appears that one of Washington’s main goals is to respond to its partners in the Caribbean who have asked for help in addressing the rise in energy prices following Russia’s invasion of Ukraine.

A statement issued by the office of US Vice President Kamala Harris said that the US Treasury Department will take measures and measures to help meet the long-term energy needs in the region.

The latest license will allow PDVSA, Shell and Trinidad and Tobago to jointly plan and develop a gas export project after pending details are approved in the coming days.

And in November (2022), the United States issued a 6-month license to the American company Chevron to allow it to expand its operations in Venezuela and transport oil to the United States.

Chevron’s license was one of Washington’s first concrete measures to ease sanctions, spurring Caracas to work with opposition leaders.

Trinidad and Tobago is the largest exporter of LNG in Latin America, with a processing capacity to convert gas into LNG, petrochemical products and electricity at about 4.2 billion cubic feet per day, but its gas production does not exceed 3 billion cubic feet per day.

Experts believe that even with Washington’s approval of Trinidad and Tobago’s request, it may take years of investment and efforts to transfer Venezuelan gas to Trinidad and Tobago and boost LNG exports.

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