Venezuela, Trinidad, Shell sign gas supply deal
Caracas, 15 March (Argus) — Venezuela's state-owned PdV today signed a preliminary agreement with Shell and Trinidad and Tobago's state-owned National Gas Company (NGC) to export Venezuelan offshore gas to the nearby country.
The gas supply agreement signed today in Caracas includes Shell as a signatory for the first time. A state-to-state agreement signed in December 2016 laid the groundwork for the deal.
If the project comes to fruition, Shell would be the key actor across the supply chain — from the wellhead in Venezuela's shallow-water Dragon field, to the company's Hibiscus platform off Trinidad, and to LNG loadings from Trinidad's underutilized 14.8mn t/yr Atlantic liquefaction complex, in which Shell is the main shareholder.
The European major has a long history in Venezuela and Trinidad, and recently started talks with PdV to tackle extensive gas flaring.
Shell could not be immediately reached for comment, but the firm has previously confirmed it was studying the project.
For Trinidad, Venezuelan gas is seen as critical to offsetting fast-declining domestic production, which has sparked deepening supply curtailments to the LNG, methanol and ammonia industries.
For Venezuela, a major oil exporter, the project would mark the country's first-ever gas exports and bring in much-needed hard currency.
The agreement signed today includes a project to build, operate and maintain a 17km (10.6mi) flowline to transport gas from Dragon to Shell's Hibiscus platform off the northwestern coast of Trinidad.
"The initial idea is to start producing between 200mn cf/d and 300mn cf/d from the Dragon field for Trinidad within two to three years," Venezuelan energy minister Nelson Martinez said at the signing ceremony at PdV's headquarters.
"The Dragon field is the closest to Trinidad and Tobago and has very important prospects because it can produce gas for local consumption and for export, which is of particular interest," Martinez said, adding that commercial negotiations should now advance quickly.
PdV chief executive Eulogio Del Pino, NGC chairman Gerry Brooks and Luis Prado, who heads Shell's regional division including Venezuela and the English-speaking Caribbean, signed the agreement.
"Today is a historic day.... (marking) a new milestone that will bring mutual benefits to Venezuela and Trinidad and Tobago. We will be able to monetize the gas reserves you have here," said Stuart Young, minister in the office of Trinidad's prime minister.
"I would like to welcome formally to the table Shell, which has shown itself to be a willing partner both in Trinidad and in Venezuela. I hope we can make this happen as quickly as possible with the active support from both governments," Young said.
Martinez said the new agreement will facilitate the export of Dragon gas to Trinidad because offshore gas pipeline and processing infrastructure already exists in Trinidadian waters.
"Shell has the experience and infrastructure needed to take the gas from the Paria Peninsula (in Sucre state) to Hibiscus," Martinez said. "This is a project of important dimensions and is a win-win for everyone in an agreement where all parties have a clearly identified benefit."
Dragon forms part of Venezuela's 14.7 trillion ft³ (416bn m³) Mariscal Sucre complex that includes the Patao, Mejillones and Rio Caribe fields.
Shell has played a key role in Venezuela's gas export ambitions for more than three decades. The company in the early 1990s partnered with ExxonMobil, Japan's Mitsubishi and PdV in the ill-fated Cristobal Colon LNG project, the original iteration of Mariscal Sucre.