Trinidad moves past Venezuela to tap border gas

Market: Natural gas, Petrochemicals
11/06/19

Trinidad and Tobago has cleared Shell to develop the country's side of a shallow-water natural gas field that straddles the maritime border with Venezuela, prime minister Keith Rowley said.

The move indicates Trinidad's "impatience" with Venezuela's delay in agreeing on the development of the Loran-Manatee field that contains an estimated 10 Tcf of gas, the country's energy ministry tells Argus.

"We encouraged Shell to move towards production of the Manatee aspect of Loran-Manatee," Rowley said on 7 June. "Investment will focus on Manatee while Venezuela keeps control of Loran."

The agreement with Shell was concluded during meetings with the company in Europe in early June, Rowley said.

Shell has not responded to a request for comment.

The European major bought a 50pc stake in Manatee from Chevron in June 2017. Chevron still holds the remaining 50pc.

Loran-Manatee covers block 6 on Trinidad's side and block 2 on Venezuela's side.

Negotiations on developing the field have sputtered for years. A draft agreement reached by the two governments in 2013 allocated 73.75pc of the Loran-Manatee reserves to Venezuela and 26.25pc to Trinidad.

Despite this, "Venezuela has not shown an interest in moving the project forward," the energy ministry said.

Visiting Trinidad in November 2018, Venezuela's oil minister and state-owned oil company PdV chief executive Manuel Quevedo said a deal to tap the field is "close". Similarly, Trinidad's energy ministry said at the time that an agreement is "within reach" and first gas should be delivered at the end of 2019.

"The decision to develop our part of the gas field is fueled by the inability to reach an agreement with Venezuela to monetize the deposits," the energy ministry tells Argus. "We need the gas, but the prospects of an operational agreement for the cross-border field are now further away given the current state of affairs in Venezuela."

Venezuela is in the throes of a severe economic crisis and political turmoil. More than 50 countries recognize the interim presidency of opposition leader Juan Guaido rather than the administration of Nicolas Maduro. The government and PdV are subject to US sanctions.

So far Trinidad has avoided coming down firmly on either side of Venezuela's conflict. The government abstained from a 10 January resolution by the Washington-based Organization of American States (OAS) not to recognize the Maduro government.

Trinidad's decision to move on Manatee has reduced prospects for an agreement with Caracas to tap two smaller cross-border fields - the 310 Bcf Kapok-Dorado and 740 Bcf Manakin-Coquina.

Rowley also threw cold water on a preliminary deal to import Venezuelan gas from that country's offshore Dragon field. The leading actor in that agreement is Shell.

The two governments, Shell, PdV and Trinidad's state-owned gas company NGC signed a term sheet in late August 2018 for Trinidad to purchase 150mn cf/d of gas from Dragon starting in 2020. Volumes were eventually slated to double to 300mn cf/d. A Shell platform in Trinidad would receive the pipeline gas from the Dragon field.

"Any timeline for this will depend on the timeline for the return to normalcy in that country," Rowley said.

Trinidad had been counting on the Venezuelan gas to sustain exports of LNG, methanol and ammonia. The country's own gas production has been recovering since November 2017 following a long slide from a peak of 4.3 Bcf/d in 2010, but the volumes are still short of demand.

In May BP said it may close Train 1 of the Atlantic LNG complex after 2019 because of a shortage of feedstock.

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