Trinidad and Tobago is preparing to request an extension of a license granted by the U.S. government to Shell and Trinidad's National Gas Company (NGC) to develop a significant gas project in Venezuela. The license, granted in early 2023 as an exemption to U.S. sanctions on Venezuela, allowed NGC and Shell to advance the planning of the Dragon natural gas project off Venezuela's coast to supply gas to Trinidad by 2027.
Amendments to the license in 2023 permitted payments in hard currency or commodities to Venezuela and its state-owned company, PDVSA, for gas supplies, with an extended expiration date set for October 2025. Should Shell and NGC make a final investment decision this year, they will require an extension to commence production on the project.
The initial production target for Dragon is approximately 200 million cubic feet per day. Trinidad, alongside private operators adhering to U.S. sanctions, necessitate licenses to engage with sanctioned entities like PDVSA under the U.S. sanctions that target Venezuela's oil and gas sector.
Trinidad's Prime Minister has expressed the intention to emphasize to Washington the importance of maintaining U.S. licenses for gas projects with Venezuela to safeguard regional energy security. Shell and NGC have conducted extensive assessments on the Dragon field, confirming the presence of substantial gas reserves.
The project's significance lies in benefiting both Trinidad's energy industries and providing revenue for Venezuela. Negotiations on supply contracts are ongoing, with potential revenues estimated at $30 million per month and 20% going to Venezuela as royalty payments.
Despite ongoing tensions between the U.S. and Venezuela, Trinidad's Energy Minister stated that Dragon, coupled with the Manatee project on the Trinidadian side, could collectively supply up to 1 billion cubic feet of gas per day to Trinidad's flagship Atlantic LNG project.