Raphael John-Lall

Di­rec­tor, Latin Amer­i­can En­er­gy Pro­gram, Rice Uni­ver­si­ty’s Bak­er In­sti­tute for Pub­lic Pol­i­cy, Dr Fran­cis­co Monal­di is of the view that Venezuela’s new min­is­ter Pe­dro Tel­lechea, ap­point­ed in March is “se­ri­ous” about con­tin­u­ing ne­go­ti­a­tions with T&T over the off­shore Drag­on Gas field.

Monal­di was mak­ing ref­er­ence to state­ments made by En­er­gy Min­is­ter Stu­art Young last week about T&T’s wish for the Unit­ed States to grant more con­ces­sions to T&T and Venezuela dur­ing the ne­go­ti­a­tions.

Speak­ing to a re­porter on June 1 at the En­er­gy In­ter­na­tion­al Sum­mit of the As­so­ci­a­tion of In­ter­na­tion­al Ne­go­tia­tors in Mi­a­mi, Unit­ed States, Young said there needs to be more dis­cus­sions among the Unit­ed States, Venezuela and T&T on the Drag­on Gas Field Project.

“T&T has be­come a vic­tim of the geopol­i­tics sur­round­ing our near­est neigh­bour (Venezuela) and un­for­tu­nate­ly, we are ex­pe­ri­enc­ing the col­lat­er­al dam­age from this,” Young said.

Monal­di said Tel­lechea has be­gun to “take ac­tion.”

“Min­is­ter Tel­lechea is tak­ing sig­nif­i­cant ac­tion. As al­ways, there is the rhetoric of big plans to in­crease oil pro­duc­tion but you can see, for ex­am­ple, the de­ci­sion to al­low ENI and Rep­sol to ex­port nat­ur­al gas liq­uids from their off shore project and the an­nounce­ment that this is a first step to po­ten­tial­ly de­vel­op an LNG project on the east­ern side of Venezuela. This project in Venezuela’s Paragua­na Penin­su­la is a very in­ter­est­ing move. I am not sure that it would hap­pen but the nee­dle is start­ing to move in terms of get­ting these com­pa­nies to stay. That sig­nals to me that he is re­al­ly in­ter­est­ed in mov­ing ahead in the project with T&T,” Monal­di said in a state­ment to the Busi­ness Guardian.

Venezuela and T&T are ex­pect­ed to meet lat­er this month to con­tin­ue ne­go­ti­a­tions.

In Jan­u­ary 2023, T&T se­cured a two-year li­cence from the Unit­ed States Gov­ern­ment to com­mence the de­vel­op­ment of the long-stalled Drag­on project.

The Drag­on project 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.

As per the es­ti­mates, the PDVSA-owned Drag­on field has up to 4.2 tril­lion cu­bic feet of nat­ur­al gas.

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 as a re­sult of the sanc­tions against Venezuela, which pre­clude the coun­try or its state-owned com­pa­nies from re­ceiv­ing cash pay­ments in US dol­lars.

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 the Drag­on field, which is north of the most west­er­ly tip of the Ch­aguara­mas penin­su­la in Venezue­lan wa­ters.

Monal­di said that the Venezue­lan side wants to move ahead in its dis­cus­sions with T&T but not with­out get­ting con­ces­sions in ex­change whether it be cash pay­ments or oth­er valu­able re­turns.

“The thing is that they prob­a­bly feel that the pres­sure by the Eu­ro­peans and the po­ten­tial in­ter­est by the Unit­ed States in help­ing the LNG mar­ket that it might be pos­si­ble to get a bet­ter deal in terms of cash pay­ments and as we know that has been sig­nalled and an­nounced by T&T. And it makes sense with what Tel­lechea has been sig­nalling in oth­er ar­eas. That is the will­ing­ness of Venezuela to move ahead but try­ing to get some­thing in ex­change. In the case of ENI and Rep­sol the Venezue­lans are try­ing to in­vest in try­ing to fur­ther ex­pand pro­duc­tion and use it as an op­por­tu­ni­ty to earn hard cur­ren­cy.”

He added that in terms of in­creas­ing oil pro­duc­tion, the Venezue­lan Gov­ern­ment said it wants to in­crease to 1 mil­lion bar­rels of oil in 2023 and al­though that tar­get may not be achieved, at least the cor­rup­tion scan­dals seem to be a thing of the past.

“How­ev­er, it is very un­like­ly that this will hap­pen but there is no doubt that Venezuela’s new Pe­tro­le­um Min­is­ter is try­ing to move things around to help Chevron, ENI, Rep­sol and oth­ers to get pro­duc­tion up. As for the cor­rup­tion scan­dals, it seems that all has been nor­malised.”