(MENAFN- Venezuelanalysis) Caracas, September 8, 2023 (venezuelanalysis) – The negotiations between Venezuela and Trinidad and Tobago over a joint energy project are expected to take a step forward.
According to Reuters , the Caribbean island's National gas Company (NGC) and UK corporation Shell are reportedly set to agree to credit Venezuelan state oil company PDfor a$1 billion investment in a Natural gas field.
Caracas and port of Spain have been engaged in talks to explore offshore natural gas reserves in Venezuelan waters, in a project to be operated by Shell. PDhad demanded that the partners recognize the construction of a pipeline connecting the field to the Venezuelan shore.
A source quoted by Reuters said the NGC and Shell are prepared to acknowledge "all legitimate claims."
Conversations began after the Trinidadian government was granted a two-year license by theTreasury Department to discuss exploration of the Dragon field with the Nicolás Maduro administration.
However, progress has been hampered byconditions that Venezuela receive no cash payments from the project. Caracas has repeatedly denounced the“colonial” nature oflicenses and refused Trinidad's proposal to pay in kind, for example via food or medicine shipments.
In late July, Trinidadian Prime Minister Keith Rowley admitted that the talks had stalled because“the Venezuelans have not accepted the terms laid down by the Americans.” His administration has reportedly lobbied the Biden White House to amend the stringent restrictions. The talks continued when Trinidad's Minister of Energy Stuart Richard Young visited Caracas in August.
Though the shared project does not involve anyentities, both the NGC and Shell would likely be targeted by secondary sanctions should they progress without a green light from Washington.
After directly targeting most Venezuelan state entities, particularly in the oil industry, theTreasury Department went on to impose secondary sanctions against Rosneft while also threatening a number of multinational corporations into winding down their Venezuela activities.
Reuters likewise reported that PDis prepared to accept part of the payment in cash and the rest in kind. The joint venture would see PDand the NGC as shareholders with Shell hired as field operator.
The exploration of the 4.2 trillion cubic feet (tcf) Dragon gas field could allow Venezuela to boost its domestic supply, while Trinidad would also increase its exports to other Caribbean customers.
The partners are additionally discussing the transportation of natural gas from the project. Apart from a partially built pipeline to Guiria on the Venezuelan east coast, a second one would be required to connect to Shell's Hibisfield in Trinidadian waters. PDhas proposed an alternative in which all the gas would be transported to Guiria so that only a smaller pipeline would need to be built to Trinidad's liquefied natural gas export plants in Point Fortin.
Venezuela currently sits on the world's eighth-largest proven natural gas reserves, estimated at over 200 trillion cubic feet. The Maduro government has recently touted the largely unexplored resources as an investment opportunity for international corporations, stating that Venezuela's supply could help address energy shortages in Europe.
In May, Venezuela granted a license to Spain's Repsol and Italy's Eni to export natural gas liquids (NGL) from their jointly-owned Cardón IV offshore project. In addition, PDis negotiating with Repsol and France's Maurel et Prom to overhaul compression plants that capture gas that is currently flared.
Whereas in joint oil ventures Venezuelan law requires that PDhold a majority stake, the same does not apply to natural gas projects.primary sanctions only target entities where PDor another Venezuelan state company owns more than 50 percent of shares. Nevertheless, foreign companies are unlikely to pursue any investment without a favorable view from theTreasury Department.