In a significant development, Venezuela is on the verge of granting a license to Shell and the National Gas Company of Trinidad and Tobago for the development of a promising offshore natural gas field. This license will enable the production and export of natural gas to Trinidad and Tobago, marking a crucial step in cross-border energy cooperation. This initiative holds the potential to boost Trinidad’s gas processing and petrochemical exports while providing much-needed revenue to Venezuela.
Prime Minister Keith Rowley of Trinidad and Tobago confirmed ongoing negotiations for the license, with Energy Minister Stuart Young expected to visit Caracas in the coming week. This endeavor gains momentum following the U.S.’s two-year authorization in January for the development of the Dragon field, located in Venezuelan waters near the maritime border between the two countries.
Venezuela, possessing Latin America’s largest gas reserves, and Trinidad, the region’s leading liquefied natural gas (LNG) exporter, find complementary interests in gas production and export. Both nations are exploring a 25-year exploration and production license for the Dragon field, estimated to hold up to 4.2 trillion cubic feet of gas.
While some terms remain to be settled, the prospect of a deal being signed in the coming days is promising. Under the proposed terms, Shell would hold a 70% stake in the project, with Trinidad’s National Gas Company (NGC) owning the remaining 30%.
Notably, Venezuela’s state-run oil firm, PDVSA, which initially discovered the Dragon field’s reserves and financed existing infrastructure, would not have a direct stake in the project. Instead, Venezuela would receive either cash or a portion of gas production as royalties.
The U.S. recently eased sanctions on Venezuela, allowing Caracas to receive proceeds from gas sales, which has expedited negotiations. The proposed license would enable the initial export of 300 million cubic feet per day (mcfd) of Venezuelan gas to Trinidad for LNG production, commencing in late 2026, with an additional 50 mcfd allocated to petrochemical plants.
The agreement sets a price that would make the gas economically viable, landing it across the border at less than $3 per thousand cubic feet (mcf). Negotiations have also considered a signature bonus, sought by PDVSA, which Shell and NGC aim to link to specific project milestones.
To facilitate gas transportation, two separate pipelines are under consideration. One partially constructed by PDVSA to Guiria on Venezuela’s eastern coast, and the other connecting to Shell’s Hibiscus field in Trinidad. The addition of a new pipeline from Guiria to Point Fortin, the hub of Trinidad’s LNG facilities, is also being explored. While this option would allow Venezuela to process gas domestically and potentially export gas liquids in the future, it could extend the project timeline.
This development signifies a significant step forward in regional energy cooperation and has the potential to bolster economic prospects for both Venezuela and Trinidad and Tobago.