Director of the Latin American Energy Program at Rice University’s Baker Institute for Public Policy, Dr Francisco Monaldi believes that T&T and Venezuela will both benefit when they begin to exploit the Dragon Gas Field but there are many hurdles that they need to overcome before this happens.
For many years both countries have been talking about exploring the cross-border gas reserves but nothing concrete has happened as yet.
In 2007, then Venezuelan President Hugo Chávez and then T&T’s Prime Minister Patrick Manning signed an accord to unify two offshore reserves of natural gas.
“Venezuela is in a tough position based on a combination of things. They don’t have another outlet for their natural gas at this point. They were supposed to develop the Dragon Field close to the Hibiscus Field being operated by Shell on the Trinidadian side.
“Venezuela has not completed development of the field or the infrastructure to bring it to the domestic market,” he told Guardian Media in an interview from Rice University, Houston in the United States.
Given the difficult situation Venezuela is in, he said the Venezuelan Government is looking for opportunities to monetise this field.
“This requires significant investment before production starts. So the Venezuelan Government needs T&T. T&T has the Atlantic LNG trains that are not at full capacity.”
The US Treasury Department on January 23 granted T&T a license allowing it to import Venezuelan gas and convert it into Liquefied Natural Gas (LNG). The Venezuelan-owned Dragon gas field contains 4.2 trillion cubic feet.
The Energy Chamber of T&T in an article on its website in January said importing gas from Venezuela to T&T will provide natural gas for the downstream petrochemical and LNG sectors, helping secure jobs, foreign exchange and continued business opportunities.
In January, Prime Minister Dr Keith Rowley indicated that the payment of gas to Venezuela could be made through humanitarian supplies such as medicine and food, due to sanctions.
Washington last year authorised US and European firms to resume taking Venezuelan crude oil on the condition no funds be paid to Venezuela. The United States authorised T&T to import gas from a Venezuelan offshore field but barred cash from changing hands.
Given the position of the United States, in February, the President of Venezuela, Nicolás Maduro lashed out at US licences barring companies doing business with sanctioned Venezuelan state firms from paying cash to his administration.
“They tell a country it has permission to negotiate with Venezuela, but it cannot pay in dollars or any form of cash. It must pay with food or products,” Maduro said in a broadcast. “That is colonisation.”
Humanitarian Payment
Monaldi commended T&T for going to the United States before it began negotiations with Venezuela.
“The T&T Government was very smart for going to the US and mentioning the issues that the Americans are concerned about like the crisis in Europe and in the Caribbean because of the high price of LNG. It’s a perfect marriage with T&T needing the gas and Venezuela having the gas.”
On the issue of how T&T will pay Venezuela, he called the licence that the United States issued to T&T “restrictive and limited.”
“It will not allow payments of cash to the Venezuelan Government. Any deal will require the payment of royalty to the Venezuelan side. This will be done via humanitarian aid and the details of how that will be accomplished have to negotiated. The Office of Foreign Affairs Control (OFAC) in the US must allow the licence to proceed. It’s a complex negotiation.”
He added that paying Venezuela using humanitarian goods will be complicated but solutions must be found.
“It’s complex as how they will deliver that. T&T in the past has delivered humanitarian aid to Venezuela. Medical equipment was delivered in the past. Liquefied Petroleum Gas (LPG) is needed in Venezuela and maybe it can be imported through T&T. It must be something that OFAC considers to be humanitarian aid. Of course, Venezuela does not like that idea as they want cash for their royalties. So far the licence to Chevron has been limited.”
Once talks are completed, he spoke about how it will benefit Venezuela.
“This will mean $25 million monthly from gas. It’s not a game-changer. It’s not a big deal in terms of income for Venezuela even if it was paid for in cash but it’s the first opportunity to monetise gas resources that have been in place since the 1990s. It has never been developed.”
Venezuelan Views
The Managing Partner of Gas Energy for Venezuela, Antero Alvarado in an interview with Venezuelan radio station Union Radio pointed out that for Petróleos de Venezuela (PDVSA) this license to extract gas represents many challenges and it will take time to export gas to T&T.
“This requires money, people, time and we don’t know if it’s a priority. Then, it remains as a pending task who will be the visible face of the Venezuelan side that is responsible for paying taxes and royalties. This is not so easy and fast, it will not happen in the next three years,” he said.
However, he clarified that the private license for T&T to export Venezuelan gas is not a relaxation in the policy of the Joe Biden Government towards Venezuela.
He gave the view that the export of Venezuelan gas to T&T represents a great opportunity for the country.
Venezuelan journalist Angel González in an article for Venezuelan newspaper El Ultimas Noticias referred to the move by the US to allow T&T to explore the gas fields with Venezuela, a small but important step.
“In any case, this means a new small opening, a new ‘tear’ in the straitjacket that the White House has imposed on Venezuela. It is evident that Washington’s punishment not only harms Venezuelans, but also other countries, such as the Caribbean islands, for example. But only when Europe needs gas, due to the blockade imposed on Russia, does the US make these movements.”
Venezuela’s Humanitarian Needs
Economist and retired director at Institute of International Relations, University of the West Indies (UWI) Dr Anthony Gonzales who gave a local perspective told Guardian Media that negotiations will depend on what Venezuela’s Government thinks its needs are.
“I cannot say what may be acceptable to the Venezuelan Government. Humanitarian aid and other payment methods as paying Venezuelan debt could be realistic depending on the needs of the Venezuelan Government at the time of negotiations.”
He said that talks about exploring the cross-border gas reserves are not new so he expects that inevitably negotiations will be successful.
“In 2018, Venezuela agreed to sell T&T the gas so one can expect that negotiations will be successful unless the Venezuelans change their minds. The negotiations seem to depend on more what the US Government will do in two years and what democratic concessions the Venezuelans make that would satisfy the US. It is still risky.”
Minister of Energy and Energy Industries Stuart Young is expected to return to Caracas, Venezuela, soon to continue discussions on the Dragon Gas Field deal.
Speaking at the post-Cabinet press briefing at the Diplomatic Centre in February hours after returning from similar discussions in Caracas, Young said a delegation of experts will accompany him to continue those discussions.
“I would hopefully be leading a team and a delegation of experts and technical persons in three weeks’ time, the second week of March, back to Caracas for us to continue those conversations and negotiations that are set on the right pathway for us to be able to jointly develop the Dragon Gas Field and hopefully bring that gas into production in Trinidad and Tobago, as well as in Venezuela,” Young said.
