By Kimberly Ramkhalawan
January 27, 2023
Earlier this week, Trinidad and Tobago got the green light to pursue natural gas exploration of the Dragon field on the Venezuelan side of its maritime borders.
The move comes after much lobbying by the Trinidad and Tobago Government, along with its fellow CARICOM Government leaders at Washington. Meetings were held last year with the Trinidad and Tobago leadership, when they visited the United States for the Summit of Americas meeting in Los Angeles. There, they met with Vice President Kamala Harris and US President, Joe Biden as a means of enhancing the Caribbean’s regional energy security. When it comes on stream, the gas supply is set to benefit the region in providing a natural gas supply, going all the way to The Bahamas from Trinidad and Tobago, with particular interest as a supplier to the Dominican Republic and Jamaica.
On Tuesday TT Prime Minister Dr Keith Rowley, described the decision by the U.S. Treasury Department to grant the license to Trinidad and Tobago as a major development for both economies, as it will see 350 million cubic feet of gas per day from the Dragon field.
It comes after the oil and gas producing state has seen a dwindle in its proven gas reserves, from processing 4.2 billion cubic feet per day (bcfd) to seeing its gas production dropping to below 3bcfd per day, causing several of its downstream sector plants such as methanol and ammonia plants having to shut down along with Train one.
Dr Rowley attributes the change of heart on the part of the US, to much lobbying by Congresswoman Maxine Waters arising from several discussions had with the US congress and Caribbean leaders in recent months, where it was asked to see it happened in the nearest possible time, for ensuring energy security for the region, where he, as Prime Minister of Trinidad and Tobago, sits as Vice Chair.
The Dragon Gas deal goes back to a signed government to government agreement between TT and Venezuela in 2018, however, it was stalled due to US sanctions against Venezuela. Under the current agreement with the United States, 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.
However, Venezuela’s PDVSA is heavily sanctioned and with the bar against the Maduro regime still in place, it prevents the Venezuelan Government from receiving any cash payments from this project.
As to the timeframe for when gas will be delivered or brought to market, the prime minister could not give a specific answer, as it was a matter of exploration of potential wells by Shell in the area. The agreement will see a two-year license and will see Shell’s pipelines be used to transport gas from the Dragon field to Trinidad waters.
But what are the energy and international relation consultants saying about this move. Former Energy Minister and international oil and gas consultant, Kevin Ramnarine, congratulated the Rowley regime for keeping consistent in tackling the neighbouring gas reserve, especially with Trinidad and Tobago in its current gas shortage phase, which has been getting worse in recent years.
And while Dr Rowley says it is not possible to yield gas within this year, Ramnarine is putting an estimation of the first gas getting pumped within three to four years.
In providing statistics for the year 2022, Ramnarine said Trinidad and Tobago’s “natural gas production averaged around 2.7 billion cubic feet per day which while three percent better than the previous year was 29 percent less than the 2015 figure and 37 percent less than the 2010 figure”. Citing that the drastic fall in production seen in 2020 and 2021, resulted in the closure of Atlantic Train 1, closed plants at Point Lisas and ongoing curtailments.
The opposition in Trinidad and Tobago is questioning the monetization of the Dragon field, especially without any commercial agreement established carefully as yet. Rushton Paray, who is the shadow Trade Minister, questions the legislative framework which would facilitate this exchange of gas, and what would be the bartering process. And while the project is a costly one, how would returns benefit Trinidad and Tobago long term, as it is something that will take years before seeing its actualization come onstream to supply the downstream sector in Trinidad and Tobago. To Paray, the questions seem to outweigh the announcement.
While defending the notion that it criticised the Dragon Gas deal, Opposition UNC Chief Whip David Lee (Energy spokesman) says it has “always raised questions on the timeline of implementation back in 2017/2018 because this Government highlighted it as the key to ending the gas shortage, which we knew fully well was not possible. The UNC was vindicated in its questions for the national interest, as the project was indeed delayed.” Lee however remarked that “The recent announcement will not magically fix T&T’s decimated energy sector, as first gas from this project is years away. This announcement, while offering potential in years to come, doesn’t change the vulnerable grim energy reality that this Government has driven T&T’s oil and gas production to its lowest in 18 years because they’ve failed to innovate the sector outside of this Dragon Field.”
The Energy Chamber, which recently concluded its annual international conference this week, during the height of the news, shared that the latest happenings as a welcomed opening up to “renewed possibility for Trinidad & Tobago to import natural gas via pipeline from Venezuela. With a significant potential to process natural gas exported by pipeline into either LNG or petrochemicals for international markets, Trinidad & Tobago represents the best opportunity for Venezuela to monetize its massive offshore gas reserves and stop harmful and wasteful flaring of associated gas in its oilfields. This will ensure that Venezuela can both generate the income needed to overcome the country’s continuing humanitarian crisis as well as provide the world with additional LNG, fertilisers and lower carbon fuels”.
Also bordering on the Venezuelan border for the twin island state, is the Loran Manatee field, to which Trinidad and Tobago holds 27 percent stake. Responding to questions on how feasible tapping into this field is especially with the Dragon deal on the horizon, Dr Rowley replied as something to wait and see. Under the Rowley regime, its oil producing company, Petrotrin was closed down. However, the refinery remains in place.
The latest energy news for the twin island state comes even when questions were asked during the course of this week’s Energy Conference, if any potential buyers for the refinery had approached him, including Guyana’s President Dr Irfaan Ali. Dr Rowley said sale of the Petrotrin refinery remained on the cards, but was concerned with the world moving away from fossil fuels, if a sale was even possible going forward.