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Thursday, July 3, 2025

Economists cautious on Dragon deal

by

20161206

Mon­day brings prospects of a gas sup­ply from Venezuela's Drag­on Field clos­er to re­al­i­ty, a for­mer en­er­gy min­is­ter and econ­o­mists are urg­ing cau­tion on the deal.

Econ­o­mist and head of Bourse Se­cu­ri­ties Sub­has Ramkhelawan said the deal is "a good test case for fur­ther agree­ments be­tween Trinidad and To­ba­go and Venezuela" but econ­o­mist In­deera Sagee­wan-Al­li ex­pressed con­cern that the Ven­zue­lan gov­ern­ment is un­sta­ble with a rep­u­ta­tion for "chang­ing its mind and de­ci­sions at the drop of a coin."

Sagee­wan-Al­li added Venezuela is cur­rent­ly go­ing through "a dif­fi­cult eco­nom­ic sit­u­a­tion and is grab­bing at straws, but if some­thing hap­pens to change their for­tunes then they will not give Trinidad and To­ba­go the time of day."

She said: "We're be­ing hope­ful it will pan out. It is good to have hope but a coun­try's fu­ture needs to be po­si­tioned on a very sol­id foot­ing. I do not feel at this point in time we can cel­e­brate or bring out the cham­pagne.

"Venezuela does not hold to the same de­mo­c­ra­t­ic prin­ci­ples like coun­tries like ours. They may not feel they have to ho­n­our the agree­ment."

That con­cern was shared by for­mer en­er­gy min­is­ter Kevin Ram­nar­ine, who told the T&T Guardian: "Venezuela is in the midst of an eco­nom­ic melt­down. We putting our en­er­gy se­cu­ri­ty in the hands of a coun­try that has a dif­fer­ent view to ours. There are a lot of po­lit­i­cal risks from which we should be pro­tect­ed."

While Ram­nar­ine ac­knowl­edged that the agree­ment "is a step in the right di­rec­tion", he said the po­lit­i­cal risk should not be ig­nored.

"Cur­rent­ly, Ukraine buys gas from Rus­sia and if the Rus­sians are un­hap­py they turn off the gas. There is po­lit­i­cal risk. There are tech­ni­cal and po­lit­i­cal risks that need to be sort­ed out."

The for­mer min­is­ter said Gov­ern­ment needs to tell the coun­try the de­tails of the agree­ment.

"Who is pay­ing for the pipeline, is it PDVSA NGC or Shell? At what price are we buy­ing the gas? Is the gas go­ing to At­lantic or Pt Lisas? Shell has an in­ter­est in At­lantic. Gov­ern­ment needs to say where the gas is go­ing," he said.

Ram­nar­ine al­so has ques­tions about the me­ter­ing of the gas and where the me­ter will be placed?

"When is the gas go­ing to come to Trinidad? We hear­ing one year, we hear­ing two years, what is the time­line? The dev­il is re­al­ly in the de­tails," he said.

Sagee­wan-Al­li said while the deal sounds good and if it pans out it would "re­dound to the ben­e­fit of the coun­try", T&T should not put bets on it.

"Even though an agree­ment is be­ing signed, agree­ments can be bro­ken," she said.

She is op­ti­mistic, how­ev­er, that the ne­go­ti­a­tions were con­duct­ed in the best in­ter­est of the coun­try.

There have been re­ports that as part of the agree­ment, NGC will have to foot the bill for build­ing 17 kilo­me­tres of pipelines for this coun­try to ac­cess the gas from the Drag­on Field, at a cost of be­tween US$40 mil­lion to US$60 mil­lion.

That is just about $400 mil­lion to bring the gas from the Drag­on Field to the BG plat­form on Trinidad's north coast.

Ramkhelawan said one thing that has to be de­ter­mined is whether the BG line has the ca­pac­i­ty to trans­port its own gas as well as gas from the Drag­on Field.

He said gas from the Drag­on Field "would be a good fil­lip in terms of the gas sup­ply for this coun­try " but cau­tioned that "it does not solve the long term prob­lem" as Gov­ern­ment needs to look at the next 8-10 years.

"We do have a num­ber of blocks that have been giv­en out for ex­plo­ration, but will that sup­ple­ment, giv­en low oil pro­duc­tion, and what will in­cen­tivise peo­ple to go out and ex­plore?" he asked.

T&T has an an­nu­al gas de­mand of 4.2 bil­lion stan­dard cu­bic feet.


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