Trinidad in substantive negotiations with Venezuela on gas project

Trinidad and Tobago has held substantive talks with Venezuela on developing the promising Dragon offshore gas field following a U.S. authorization to begin the long-stalled project, Energy Minister Stuart Young told Reuters on Thursday.

Young is planning a third visit this month to Caracas to talk with Venezuela's Energy Minister Tareck El Aissami and Pedro Rafael Tellechea, president of Venezuelan state-run oil company PDVSA, he said.

The United States in January green-lit the project after lengthy appeals by Trinidad and some Caribbean neighbors. The two-year authorization to Trinidad came among several by President Joe Biden's administration that have eased some sanctions on Venezuela.

Dragon holds up to 4.2 trillion cubic feet of natural gas. Trinidad needs the fuel to boost its liquefied natural gas (LNG) and petrochemical industries. A portion of the country's Atlantic LNG export facility has been idled due to a lack of gas.

The two countries have "a relationship of respect," Young said. They had progressed on developing the field through 2018, which led to a commercial agreement aiming to bring gas supply to Trinidad in 2020. But U.S. sanctions halted the effort.

If negotiations go well, gas technically could begin flowing in two years, he said.

Shell is a partner in the development alongside Trinidad's National Gas Company, PDVSA and PDVSA Gas, he said. Shell's role has been authorized by Washington, whose approval was conditioned on no cash payments to Venezuela.

The government and companies participating in the Atlantic LNG project also are expected to sign next month a definitive agreement restructuring its ownership, the minister said.

Dragon, which lies near the maritime border of the two nations, is owned by PDVSA, which discovered the reserves and built the field's infrastructure. Its development has been stalled for over a decade on a lack of investment and sanctions.

"The license right now is only for Dragon, but there is a lot of gas there. We will take one step at a time," Young said in an interview on the sidelines of the CERAWeek conference.

New blocks, new partners. "We are not putting all our eggs in one basket," Young said when asked about potential alternatives in the event gas imports from Venezuela are delayed, as it has happened before.

The Caribbean nation is eyeing two flagship offshore gas projects, Woodside Energy's Calypso and Shell's Manatee, as potential feeders to its Atlantic LNG facility, but it could take years before they inaugurate production.

Woodside Chief Executive Officer Meg O'Neill told Reuters this week that its Calypso gas project off Trinidad's coast is in its initial stages, and a final investment decision is not expected this year.

Trinidad also is moving ahead with auctions to secure participation of oil and gas firms onshore and offshore.

Following a deepwater auction where a consortium including BP and Shell submitted bids on four blocks, the government is negotiating commercial and operational terms with them while readying the launch of a shallow water round this month. It also is evaluating 16 bids received during a separate onshore auction.

"I understand deepwater is a new province for Trinidad. We must be able to think outside of the box," he said.

(Reporting by Marianna Parraga and Gary McWilliams Editing by Marguerita Choy)


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