It has taken more than a decade, including five years of on-and-off negotiations disrupted by geopolitical setbacks, to get to the point of securing a licence for the Dragon gas field.
The significance of this development for T&T’s energy sector was underscored by Prime Minister Dr Keith Rowley in a post on his Facebook page late Thursday, in which he declared that “a door to a new commercial frontier has been opened for the benefit of all our people.”
That is not an exaggeration.
Barring the political spins for and against that are bound to be put on this issue in the coming hours and days, the Dragon deal provides much-needed economic lifelines to T&T and Venezuela.
Venezuelan gas will supplement this country’s reduced gas reserves, allowing for full resumption of exports at the Atlantic LNG Terminal.
For our closest South American neighbours, this is an opportunity to process and monetise a substantial natural gas field, providing that cash-strapped nation with an additional and reliable source of revenue.
The Dragon gas field, located in the Mariscal Sucre region offshore Venezuela and adjacent to the Venezuela-Trinidad maritime border, is expected to produce approximately 150 million standard cubic feet of gas a day.
This gas will be imported through the Hibiscus platform off northwest Trinidad, which is jointly owned by the Government, NGC and Shell, providing a steady supply to the country’s flagship Atlantic facility.
Atlantic’s four processing trains can produce up to 15 million metric tonnes per annum (MTPA) of liquefied gas but was only able to produce 8.2 MTPA last year.
Just to highlight the circuitous route it took to get to the stage of securing the licence, the field was first offered for development by Venezuela’s state-owned Petróleos de Venezuela, SA (PDVSA) about a decade ago.
However, although production tests were made and a gas line partially built, the field was not commercially developed.
An initial agreement to import natural gas from the Dragon field was made between NGC, Shell and PDVSA in August 2018 but less than a year later, that deal was in limbo because of the political turmoil in Venezuela. US sanctions further delayed the start of production.
After a series of setbacks, there was a major breakthrough at the start of this year when the Government secured a two-year licence from the US, clearing the way to start development of the long-stalled project.
In many ways, this is an early gift for T&T’s natural gas sector, which achieved its highest output in 2010 but has been struggling with depleting reserves since 2017.
The Dragon gas deal comes just days after the finalising of a shareholders’ agreement for the restructuring of Atlantic with Shell, BP and NGC during Prime Minister Rowley’s recent trip to London. It includes a deal to increase the stake and potential revenues available to the NGC, which could yield greater revenues for the country.
While this might be some light at the end of a long dark tunnel of supply shortfalls for T&T’s energy dependent economy, judicious management on the part of the state and the various industry stakeholders and partners is key for long-term success.
This is a journey toward economic diversification with energy transition as a major objective, so T&T’s improved fortunes should not be squandered.