Trinidad offers to pay for Venezuelan gas with humanitarian supplies
A view of the Aban Pearl gas rig in the Caribbean sea, along the Venezuelan coast
Wed, January 25, 2023
By Curtis Williams
PORT OF SPAIN (Reuters) - Trinidad and Tobago would pay Venezuela for natural gas produced at an offshore development with humanitarian supplies like food and medicine, Prime Minister Keith Rowley said, to comply with a U.S. license prohibiting cash payments to the government of President Nicolas Maduro.
The U.S. Treasury Department on Tuesday issued a license allowing Trinidad to co-develop the Dragon gas field, which holds 4.2 trillion cubic feet of reserves on the Venezuelan side of the maritime border with Trinidad. The project would have Trinidad import the gas and turn it into exportable liquefied natural gas (LNG).
"We have done that before. So we buy the gas and we pay for it in a variety of ways," Rowley told journalists late on Tuesday. Trinidad previously supplied Venezuela with about $50 million in humanitarian goods, he said.
Venezuela has resorted to swaps to make its economy work amid stiff U.S. sanctions prohibiting financial transactions or the use of dollars to pay Venezuela or the country's state companies.
Maduro has been pressing Washington and other governments to free over $3 billion frozen in foreign bank accounts - money which could be used to import food, medicine and other goods.
The United Nations has been called to administrate a fund that would be financed with those resources, but there has been no agreement between Maduro, the United States and the country's political opposition on how to implement it. The opposition controls most of the country's foreign assets.
NEW OPERATOR
Venezuela's state oil company PDVSA owns and operated the Dragon gas project when it was last active about a decade ago. A new operator would have to be appointed to bring new investment, said Latin American energy expert Francisco Monaldi.
"From the perspective of opportunities, PDVSA does not have better options at this time to sell that gas under sanctions," even if it means relinquishing operations, he said.
Shell, which operates the neighboring Hibiscus field in Trinidad, ideally could become the operator, said Trinidad's Rowley.
Trinidad and Venezuela would have to decide on how to compensate PDVSA for past exploration and infrastructure, said Monaldi, a director at the Center for Energy Studies at Rice University's Baker Institute for Public Policy.
PDVSA did not reply to a request for comment. Shell declined to comment.
(Reporting by Curtis Williams, writing by Marianna Parraga, Editing by Rosalba O'Brien)
A view of the Aban Pearl gas rig in the Caribbean sea, along the Venezuelan coast
Wed, January 25, 2023
By Curtis Williams
PORT OF SPAIN (Reuters) - Trinidad and Tobago would pay Venezuela for natural gas produced at an offshore development with humanitarian supplies like food and medicine, Prime Minister Keith Rowley said, to comply with a U.S. license prohibiting cash payments to the government of President Nicolas Maduro.
The U.S. Treasury Department on Tuesday issued a license allowing Trinidad to co-develop the Dragon gas field, which holds 4.2 trillion cubic feet of reserves on the Venezuelan side of the maritime border with Trinidad. The project would have Trinidad import the gas and turn it into exportable liquefied natural gas (LNG).
"We have done that before. So we buy the gas and we pay for it in a variety of ways," Rowley told journalists late on Tuesday. Trinidad previously supplied Venezuela with about $50 million in humanitarian goods, he said.
Venezuela has resorted to swaps to make its economy work amid stiff U.S. sanctions prohibiting financial transactions or the use of dollars to pay Venezuela or the country's state companies.
Maduro has been pressing Washington and other governments to free over $3 billion frozen in foreign bank accounts - money which could be used to import food, medicine and other goods.
The United Nations has been called to administrate a fund that would be financed with those resources, but there has been no agreement between Maduro, the United States and the country's political opposition on how to implement it. The opposition controls most of the country's foreign assets.
NEW OPERATOR
Venezuela's state oil company PDVSA owns and operated the Dragon gas project when it was last active about a decade ago. A new operator would have to be appointed to bring new investment, said Latin American energy expert Francisco Monaldi.
"From the perspective of opportunities, PDVSA does not have better options at this time to sell that gas under sanctions," even if it means relinquishing operations, he said.
Shell, which operates the neighboring Hibiscus field in Trinidad, ideally could become the operator, said Trinidad's Rowley.
Trinidad and Venezuela would have to decide on how to compensate PDVSA for past exploration and infrastructure, said Monaldi, a director at the Center for Energy Studies at Rice University's Baker Institute for Public Policy.
PDVSA did not reply to a request for comment. Shell declined to comment.
(Reporting by Curtis Williams, writing by Marianna Parraga, Editing by Rosalba O'Brien)
Editor OilPrice.com
Wed, January 25, 2023
The U.S. Treasury has granted a license to Trinidad and Tobago, allowing the Caribbean nation to develop a gas field offshore Venezuela and do business related to the gas field with Venezuela’s state oil firm PDVSA, Reuters reports, quoting officials from the U.S. and Trinidad.
Trinidad and Tobago asked for a license from the U.S. Department of the Treasury in the middle of 2022, and the exemption was recently granted by the U.S. Administration.
Trinidad and Tobago expects to gain access to around 350 million cubic feet of gas per day from the offshore field Dragon, Prime Minister Keith Rowley told a news conference, as carried by Reuters.
Despite the license, the Venezuelan government of Nicolas Maduro will not receive any cash payments from the project, and all remaining U.S. sanctions on Venezuela’s energy industry will be left unchanged, an anonymous senior U.S. official told Reuters.
The license is aimed at boosting the energy security in the Caribbean basin and is another small step in the easing of the U.S. sanctions on Venezuela’s oil and gas industry.
The Biden Administration has recently eased part of the sanctions imposed on Venezuela – initially slapped by former President Donald Trump – including granting U.S. supermajor Chevron, the only American company still operating in Venezuela, a six-month license that allows Chevron to import some Venezuelan crude oil to the United States for sale to U.S. refiners.
Earlier this month, reports had it that Chevron Corp recently sold 500,000 barrels of heavy Hamaca grade to U.S. refiner Phillips 66 to be used in its Sweeny, Texas refinery, anonymous sources told Bloomberg. It would be the first such sale since the United States sanctioned Venezuela’s crude oil. Venezuela’s heavy crude oil is prized by U.S. refiners, who, until recently, looked to Russia’s heavy crude to replace it. In December, it was reported that several refiners were hitting up Chevron to get their hands on the rare Venezuelan crude oil.
By Tsvetana Paraskova for Oilprice.com
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