U.S. Grants License for Trinidad to Develop Major Gas Field in Venezuelan Waters
- January 25, 2023
- Posted by: Quatro Strategies
- Category: Energy
The United States has issued a license for Trinidad and Tobago to develop a major gas field in Venezuelan territorial waters, the U.S. and Trinidad officials said on Tuesday, signaling a further ease of some sanctions on Venezuela. The license means Trinidad can do business in the Dragon gas field with Venezuela’s sanctioned state-controlled oil company PDVSA. Trinidad’s request for a license was granted by the U.S. to boost Caribbean regional energy security. Trinidad prime minister Rowley said the country is expected to have access to 350 million cubic feet of gas per day from the Dragon field.
Rowley also stated that the government had applied for the license in mid-2022 and gained approval after discussions with Biden, while also keeping open a channel of communication with Venezuelan President Maduro.
U.S. officials said the Venezuelan government would not receive any cash payment from this project and all remaining U.S. sanctions would remain unchanged and enforced.
The decision comes after talks between U.S. Vice President Harris and Caribbean leaders to ensure regional energy secırity and reduce reliance on other imports, including ones from Russia.
PDVSA has found gas reserves of 4.2 trillion cubic feet (tcf) in Dragon, on the Venezuelan side of its maritime border with Trinidad. The project was headed for production over a decade ago, but stalled over lack of capital and partners, as well as sanctions.
Under U.S. sanctions, companies and governments must obtain authorization from the U.S. Treasury Department to do business with PDVSA. The Biden administration has granted only a few such licenses since taking office in January 2021, mostly on a heavily restricted basis.
The Biden administration decision to grant a license follows a round of negotiations between the Maduro government and the opposition aimed at creating a path to new elections. But Maduro has since resisted sending officials to the negotiating table since then.
One of Washington’s key aims appeared to be a response to U.S. partners in the Caribbean who have called for help to deal with high energy prices following Russia’s invasion of Ukraine.
“The Vice President conveyed to the Prime Minister [Rowley] that the Treasury Department would take action to help meet the region’s long-term energy needs,” a statement from Harris’ office said.
The license will allow PDVSA, Shell and Trinidad to jointly plan and develop a gas-exporting project after agreeing to pending details in coming days. A portion of the resulting gas must be exported to Jamaica and the Dominican Republic, according to the two-year license’s terms, Rowley said.
Trinidad is Latin America’s largest LNG exporter, with installed capacity to process 4.2 billion cubic feet per day (bcfd) into LNG, petrochemicals and power. But its gas production is just under 3 bcfd.
Even with Washington’s granting of Trinidad’s request, it could take years of investment and effort to bring Venezuelan gas to Trinidad and boost LNG exports.
In addition, with no payments authorized to Venezuela, it could be difficult for Trinidad to craft a deal with Caracas.
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