As the Government plans its 2026 fiscal strategy, three experts cautioned that the new Office of Foreign Assets Control (OFAC) licence for the Dragon Gas deal with Venezuela could have significant implications for T&T’s energy sector and overall budget projections for fiscal 2026.
While Attorney General John Jeremie hailed the six-month OFAC license as a diplomatic and commercial breakthrough, former energy minister Carolyn Seepersad-Bachan, international relations experts Professor Mark Kirton and Professor Andy Knight each see layers of complexity that could temper the optimism surrounding this development.
Their analyses suggest that the OFAC licence, structured as a three-tiered approval process with strict US oversight, may force the Government to recalibrate expectations for gas revenue, capital expenditure and the pace of energy sector recovery in 2026.
In an interview with the Sunday Business Guardian last Friday, Seepersad-Bachan outlined that this new licence differs sharply from the two-year authorisation negotiated under the former administration.
“This is not a permanent license,” she explained. “It’s a three-tiered approval process where Trinidad and Tobago must meet specific criteria at each stage to progress with US review and approval. Advancement is neither automatic nor guaranteed.”
The arrangement, she noted, means that T&T’s ability to benefit from the long-awaited Dragon Gas field, which is expected to supply critical feedstock to Atlantic LNG and the petrochemical sector, is directly tied to Washington’s conditions and the cooperation of Caracas.
“The first six months appear to be a negotiation phase,” Seepersad-Bachan continued. “During this time, T&T would have to renegotiate the terms and conditions of the 30-year exploration and production licence, and all of that would need to be approved by Washington before moving to tier two.”
That timeline alone could have implications for financial planning.
“If negotiations stretch out or stall due to political or technical reasons, then the Government’s projected gas revenue for 2026 could be delayed or even reduced,” she warned.
A key uncertainty surrounds how payments will be made to the Venezuelan government, given US sanctions that bar direct cash transfers to President Nicolás Maduro’s administration.
Seepersad-Bachan emphasised that creative solutions will be required. “The Government will have to be innovative in how it makes payments. Are we talking about in-kind gas deliveries? Escrow accounts managed by international institutions? Because Washington will not allow an escrow account directly between Trinidad and Venezuela.”
This issue has fiscal significance. If payments are made in kind, through services or humanitarian projects, as OFAC rules encourage, then the transaction’s value may not translate into immediate state revenue.
“This is why the structure of the payment mechanism is critical,” Seepersad-Bachan stated. “It could affect how much foreign exchange actually enters Trinidad and Tobago’s economy in the near term.”
She also called for greater transparency around costs already incurred. Questions have emerged about a $120 million figure reportedly linked to the project.
“We need to know whether that sum represents NGC’s investment to date, design and engineering work, or royalties. Clarity matters because it shapes both the project’s financial baseline and the Government’s fiscal risk exposure,” she said.
For retired senior lecturer at the University of the West Indies, St Augustine, Professor Mark Kirton, an international relations expert and senior academic, the Dragon project sits at the crossroads of regional diplomacy and global power politics. He cautioned that while the licence is a positive step, its success depends on Venezuela’s willingness to negotiate, a factor far from assured given current tensions.
“You can’t assume that because there’s a licence, there’s an agreement,” Kirton explained. “There’s a lot of volatility in relationships right now between Venezuela and the United States, between Venezuela and Trinidad, and even within the wider Caribbean region.”
That volatility could affect timelines, confidence, and the broader macroeconomic assumptions underpinning the 2026 fiscal projections.
“The Prime Minister has indicated total support for the US position on Venezuela, but that makes the diplomatic equation more complex,” Kirton said. “If Venezuela feels isolated, it may be less inclined to expedite negotiations with Trinidad.”
Kirton also pointed to Shell’s active engagement as a complicating factor. “Shell is already negotiating, and while that’s expected, Trinidad must ensure it remains at the centre of the process. Whose interests are being protected? Trinidad’s interest must always come first.”
Kirton, who is from Guyana, noted that the timeline adds pressure and with the six-month window expiring in April 2026, T&T faces a race against time to conclude negotiations, satisfy US conditions and begin implementation all while preparing its next fiscal plan.
“There must be immediate rapprochement with Venezuela,” Kirton urged. “They are the key player. Diplomatic efforts have to intensify now, not later. I think there’s been some distance in recent months, and that window will need to be opened much wider.”
Kirton said diversifying energy relationships with Guyana, Suriname, and possibly other regional partners should form part of a broader energy security strategy for T&T.
“Yes, Dragon is important,” he said, “but we can’t put all our eggs in one basket. While negotiations proceed, there should be a parallel effort to engage Guyana and Suriname in structured discussions on regional energy cooperation. That would give Trinidad a stronger and more resilient position.”
International Relations at the University of Alberta and former director of the Institute of International Relations at the University of the West Indies in St Augustine, Professor Andy Knight, agreed that the OFAC licence will ripple beyond energy negotiations into the Government’s overall fiscal planning.
“The OFAC licence might influence the Government’s financial planning and projections for the 2026 fiscal year,” Knight said. “Government agencies and contractors are constantly adapting to changing regulations and compliance requirements, and sanctions policies can reshape, not only diplomatic strategies, but also budgetary priorities.”
Knight drew parallels to US federal budgeting processes, where agencies adjust their financial plans based on policy shifts or regulatory risks. “Trinidad and Tobago will need to take a similar approach,” he said. “If the OFAC terms change or if there’s any delay in project execution, it will directly affect energy-related revenue streams, debt management and expenditure plans.”
That uncertainty could make conservative forecasting essential for the 2026 budget. “The prudent move would be to avoid overestimating gas inflows or tax revenues tied to Dragon until there is greater certainty on implementation,” Knight advised.
For Seepersad-Bachan, the lesson is clear: T&T must prepare for volatility not only from fluctuating energy prices but also from the unpredictable nature of international sanctions and shifting US foreign policy.
“The OFAC licence can be revoked at any time,” she reminded. “That’s why the Government should ensure all fiscal obligations are linked to clear commercial milestones and that there are no upfront financing flows. We also need independent audits and strong legal protections.”
She recommended that any agreement include a “snapback clause,” a contractual safeguard that prevents T&T from incurring penalties if the licence is revoked.
“This protects us from financial exposure should political winds change in Washington,” she said.
In fiscal terms, that kind of clause could mean the difference between stability and sudden loss, particularly for projects underwritten or guaranteed by the state.
Despite the challenges, all three experts acknowledged that the Dragon Gas project remains strategically important. Its proximity to Trinidad’s infrastructure and the urgent need for new gas supplies make it a potential lifeline for the energy sector.
“We do need this gas,” Seepersad-Bachan conceded. “It could help resuscitate our petrochemical industry and LNG production, both of which are vital for foreign exchange earnings. But while pursuing Dragon, we must also push ahead with deepwater exploration and unlock stranded gas in shallow waters.”
For Kirton, that balanced approach is key. “Dragon can be part of a new development trajectory for Trinidad and Tobago,” he said, “but only if it’s managed with skillful diplomacy, fiscal prudence, and regional cooperation.”
As Knight summarised, “The Government will have to build flexibility into its fiscal planning, ready to pivot if the geopolitical or regulatory landscape shifts. The OFAC licence is not just an energy issue. It’s a macroeconomic one.”
