Director of the Latin American Energy Program, Rice University’s Baker Institute for Public Policy, Dr Francisco Monaldi believes that the latest meeting between T&T and Venezuela over the Dragon Gas Field negotiations could be a “win-win” for both countries.
Last Tuesday, Energy Minister Stuart Young met Venezuelan President Nicolas Maduro at Miraflores Palace in Caracas and while Venezuela’s Government issued a short release to the media, it gave no details about what was discussed.
Caracas is currently engaged in negotiations with Port-of-Spain to export natural gas from Venezuela’s Dragon Field, which is estimated to hold up to 4.2 trillion cubic feet (tcf) of natural gas reserves. The operations would be run by Dutch multinational corporation Shell.
As T&T and Venezuela have been tight-lipped over details, Monaldi said he is not sure where in the negotiations both sides have reached but Tuesday’s meeting shows that the gas negotiations are “on the agenda” for both countries.
In March 2023, officials from both the countries signed non-disclosure agreements required to establish the negotiation framework.
That followed the January 2023 decision by the US administration to issue a two-year licence to T&T to commence the Dragon project following lengthy appeals by Port- of-Spain and its neighbours.
“The negotiations that are ongoing are very interesting for Venezuela from two angles and it could be a win-win for both countries. The main angle is that they will use this as the hook for Venezuela to get the Europeans interested in pushing the United States to make the sanctions more flexible. The Europeans are interested in the gas that will be exported to T&T and its potential for onshore uses. President Maduro has this covered in that it is geo-politically important.
“The second issue is the amount of money that he might get. I believe that he believes that he can get more out of it. The deal will eventually happen as it is just a matter of President Maduro getting something more,” Monaldi told the Sunday Business Guardian.
T&T urgently needs new natural gas sources in order to supply its industrial plants, which are currently operating below capacity.
The Energy Chamber of T&T on its website in January said gas from this project will provide natural gas for the downstream petrochemical and LNG sectors in Trinidad, helping secure jobs, foreign exchange and continued business opportunities.
At the end of July, Prime Minister Dr Keith Rowley in an interview, in the local media, said that negotiations over the Dragon Gas field had reached a stumbling block.
“The Venezuelans have not accepted the terms laid down by the Americans. That is the long and short of it. We fought very hard to get the Americans to give us a carve-out, which is to allow us to treat with PDVSA without breaking the sanctions; we eventually won that battle but they put a condition on it that the Venezuelans as of now have not accepted. We’re still talking on both sides; we’re still negotiating,” Rowley revealed.
The Dragon gas field project is located on the Venezuelan side of the north-western maritime border with T&T. It was scheduled to start production over a decade ago. However, sanctions by the US administration, as well as lack of capital, delayed the production start of the field.
The licence allows T&T to undertake business related to the Dragon field with Venezuela’s heavily sanctioned state-run oil company PDVSA, which is the owner of the natural gas field.
Monaldi also referred to a possible loan from the European Union (EU) that could assist Venezuela in transporting gas to T&T and then send it on to the EU.
In July, US Business news website Bloomberg reported that Venezuela is in early-stage talks with the EU on a US$1.5 billion plan to capture its methane emissions and export them to the bloc as natural gas with the help of Italian multinational Eni SpA and Spanish company Repsol SA.
The project would use a portion of the EU’s Global Gateway Initiative funds to gather emissions from Venezuela’s idle oil wells and deteriorating infrastructure.
That gas would be sent to T&T to be liquefied and shipped on to Europe bolstering the EU’s gas supplies amidst Russia’s war with Ukraine.
Monaldi said Venezuela’s Government is using the Europeans as a leverage to pressure the Americans to concede more during the negotiations.
“The Europeans are lobbying very hard for the United States to do whatever is needed to get the Dragon project so as to get LNG exported to Europe.
Joseph Borrell who is the EU’s Foriegn Affairs Representative, said Venezuela is a big part of the solution to the problem of supplies of natural gas in Europe over the next few years.
“He was talking about the Drgaon project but also about the collection of the gas being flared from fields in Venezuela. With the loan they are talking about, it is to get the gas to T&T. So the Europeans are lobbying hard to get the United States to have a natural gas policy on Venezuela that’s more flexible. The Europeans care more about natural gas than oil.”