Raphael John-Lall

Free­lance Con­trib­u­tor

The Drag­on Gas agree­ment signed by Min­is­ter of En­er­gy Stu­art Young in De­cem­ber last year, states that that “in no case may the in­come of the Venezue­lan State for the project be less than 45 per cent of the gross in­come of the li­cences.”

The agree­ment states that if Venezuela’s per­cent­age of the gross in­come from the nat­ur­al gas field falls be­low 45 per cent, “a spe­cial vari­able con­sid­er­a­tion in ad­di­tion to that al­ready es­tab­lished in this ar­ti­cle will be ap­plied.”

Britain’s multi­na­tion­al Shell and T&T’s Na­tion­al Gas Com­pa­ny (NGC), called the li­cencees, have agreed to pay Venezuela a roy­al­ty of 20 per cent of the dry gas pro­duced from the field. The roy­al­ty on the heav­i­est hy­dro­car­bons con­tained in the nat­ur­al gas will be 30 per cent, ac­cord­ing to pub­lished li­cence terms pub­lished in Venezuela’s of­fi­cial Ex­tra­or­di­nary Of­fi­cial Gazette .

The agree­ment states that in ad­di­tion to the roy­al­ties, “the Bo­li­var­i­an Gov­ern­ment will be en­ti­tled to a spe­cial con­sid­er­a­tion of five per­cent in ad­di­tion to what is pro­vid­ed in the pre­vi­ous or­di­nal which will be cal­cu­lat­ed on the pro­duc­tion vol­umes in ac­cor­dance with the eval­u­a­tion used to cal­cu­late the roy­al­ty and un­der the same con­di­tions es­tab­lished for them.”

“In no case may the Venezue­lan State’s in­come from the project be less than 45 per cent of the gross in­come of the li­cencees,” the doc­u­ment re­ports.

In the Ex­tra­or­di­nary Of­fi­cial Gazette num­ber 6,793, dat­ed Jan­u­ary 29, 2024, the terms of the agree­ment among Venezuela’s Min­istry of Pe­tro­le­um, NGC and Shell to de­vel­op the off­shore gas project in the Drag­on field were pub­lished.

The Of­fi­cial Gazette is the of­fi­cial news­pa­per of the Venezue­lan gov­ern­ment which pub­lish­es new laws, agree­ments, ap­point­ments and oth­er acts.

Young yes­ter­day con­firmed that the doc­u­ment in Guardian Me­dia’s pos­ses­sion was the of­fi­cial gazetted li­cence, which was pro­vid­ed to him by Pe­dro Tel­lechea, Venezuela’s Min­is­ter of Pop­u­lar Pow­er for Pe­tro­le­um and pres­i­dent of the coun­try’s state-owned en­er­gy com­pa­ny, PDVSA.

The gas li­cence grant­ed by the Venezue­lan gov­ern­ment and signed last De­cem­ber, will have a du­ra­tion of 30 years and will have the pos­si­bil­i­ty of be­ing ex­tend­ed for a pe­ri­od agreed by the par­ties.

Some 70 per cent of the gas pro­duced will be ex­port­ed to T&T for liq­ue­fac­tion at the At­lantic fa­cil­i­ty in Point Fortin, and the re­main­ing 30 per cent will be des­tined for the petro­chem­i­cal sec­tor, ac­cord­ing to the terms of the li­cense.

Ac­cord­ing to Ar­ti­cle 62 of the agree­ment, the li­cencees will em­ploy and re­quire their con­trac­tors to em­ploy Venezue­lans to the great­est ex­tent pos­si­ble.

Ar­ti­cle 71 states that the li­cencees may re­nounce their ex­plo­ration and ex­ploita­tion rights, as long as they have com­plied with all their oblig­a­tions and must no­ti­fy the Venezue­lan Min­istry of Pe­tro­le­um 365 days in ad­vance.

Ar­ti­cle 74 states that in the event of pro­mul­ga­tion of new laws or up­dates of ex­ist­ing laws with­in Venezuela, the Min­istry of Pe­tro­le­um, at the re­quest of the li­cencees, will take mea­sures to up­date the plan for whose pur­pos­es it has been ap­proved, thus con­tribut­ing to the macro­eco­nom­ic sta­bil­i­sa­tion of the project.

Prime Min­is­ter Dr Kei­th Row­ley as­sured the na­tion last week that the Unit­ed States has con­firmed to Gov­ern­ment that T&T will not be di­rect­ly af­fect­ed by the US pos­si­bly reim­pos­ing sanc­tions on Venezuela’s en­er­gy sec­tor.

This comes as the Unit­ed States has threat­ened to reim­pose sanc­tions on Venezuela’s oil and gas in­dus­try, over the fail­ure to reg­is­ter all op­po­si­tion can­di­dates for pres­i­den­tial elec­tions this year.