Prime Minister Dr Keith Rowley says the United States decision to waive sanctions against Venezuela, clearing the way for Trinidad and Tobago to import natural gas from our neighbours, is “a significant and happy day” for him, his team, the people of Trinidad and Tobago and Caricom.
Rowley made the comment yesterday in response to a question about what the opportunity to develop the Dragon Gas Field would mean for the country financially. Working the math, the Prime Minister said T&T could benefit to the tune of around US$450 million with a “decent profit on the margin.”
“The United States Government has today approved Trinidad and Tobago’s development of the Dragon Field via an OFAC Waiver from sanctions with specific terms to be finalised,” Dr Rowley had read just moments before from a written statement during a press conference at the Diplomatic Centre.
“What this means is that the restrictions on the Dragon Gas Field development are now relieved and all relevant parties can progress the plans to result in natural gas from Venezuela.”
The United States, during the Trump administration, had placed strict economic sanctions on the Nicolas Maduro-led Venezuelan government in 2019 because it claimed the government was suppressing human rights in the country.
However, the terms of the waiver are still to be worked out, as the Prime Minister said there is still significant work to be done, but he noted it was “a giant step forward.”
The license has been granted for two years with the option to extend, although the T&T Government originally asked for a ten-year license, Rowley said. The exact start date of the license is also yet to be worked out.
He acknowledged the US could easily update its sanctions against Venezuela, which could impact the deal. However, the Prime Minister is choosing to remain optimistic, adding there is nothing in the terms so far that the Government could not meet.
Rowley declined to say what the US was getting out of the deal.
The US, however, imports $231 million worth of urea ammonium nitrate fertilisers from T&T and stands to benefit from clean fuel and fertilisers if the deal goes through.
Explaining some of the particulars of the deal, Energy Minister Stuart Young said the license was granted to T&T.
“NGC will be the body that will be used to transact the deal working along with Shell, and this is for the Dragon Field.”
Rowley said there are a lot of terms to be finalised between T&T, Venezuela and Shell but said the highest hurdle has been crossed and the development can be accelerated.
The fields will still be owned and run by Venezuela’s stated-owned Petróleos de Venezuela (PDVSA), but Shell will be the operator in the field, Rowley clarified.
“The field is a PDVSA field,” Rowley said.
“Whatever license we get from Venezuela to operate the field, Venezuela would be involved in that.”
Development will not be immediate though, as Rowley could not give a time frame for first gas, saying he would have to be advised by Shell and the Venezuela government. He said it needs to be soon, however, because the market needs the products.
“We’ll be going full speed ahead to get it to market at the earliest opportunity,” Rowley said.
“It’s not going to be tomorrow. It’s not going to be 2023 because there’s a lot of work to be done, a lot of lead time, and a lot of engineering work to be done.”
One of the major caveats of the deal is the requirement T&T shares the spoils with Caricom nations.
“One of the main conditions is that we give priority to supplying our Caribbean neighbours who need it,” Rowley said.
He thanked the Dominican Republic President Luis Rodolfo Abinader, saying he was instrumental in the discussion of energy security in the region, and adding that country looks to T&T for energy supplies. Jamaica will also be a major beneficiary under the agreement.
Rowley specifically thanked Guyana President Irfaan Ali, Suriname President Chan Santokhi, Barbados Prime Minister Mia Mottley and Antigua and Barbuda Prime Minister Gaston Browne and Prime Minister of The Bahamas Phillip Davis.
“All of whom have been in Trinidad and Tobago’s corner pushing us to this point of encouraging the United States to do this,” Rowley said.
He said the cost to the country would be minimal, namely legal fees “very small” in comparison to what can come out of it.
When asked if Venezuela could not receive cash payments, he said that wasn’t a problem because it’s been dealt with before, saying it could be paid for in many ways.
Told that he had warned on Sunday of “difficult days” ahead in the energy sector and asked if the deal changes his mood, the PM said, “A little bit.”
“The infrastructure to handle these kinds of resources to bring to the world market usually needs a horizon of 20-25 years if you’re going to make new investment. So, if your reserves are only dribbling along with a five or ten-year horizon, you can’t look to any new investment. So, having access to gas fields outside of our border, this is a seminal development because it’s the first time we have had this opportunity,” Rowley said.
Following the announcement, US Ambassador to T&T Candace Bond said it reinforced the relationship between T&T and the US.
“Today, we reinforce the closeness, strength, and depth of our over 200 years of friendship and cooperation. Upon my arrival, I promised to work to further strengthen our countries’ unique bond, to deepen and grow our already close relationship, and to ensure that our cooperation continues to yield positive results for both of our countries,” Bond said.
“We share Trinidad and Tobago’s urgency in contributing to global energy and food security. We have listened to the Government of the Republic of Trinidad and Tobago’s message that it has the capacity and willingness to ameliorate economic and humanitarian crises around the region and the world.”