Extending the Deadline: Touchstone’s Trinidad Gambit in a Declining Gas Landscape

The Trinidad Central Block project, a joint venture between Touchstone Exploration and Shell, has entered a critical phase with the extension of its long-stop date to May 12, 2025. This move underscores both the challenges and strategic ambitions of a resource sector grappling with declining output and regulatory hurdles. For investors, the decision offers a lens into the calculus of risk and reward in Trinidad’s gas-dependent economy—and the precarious balance Touchstone must strike to secure its stake in the project.

The Deal: A Race Against Time

The amendment to Touchstone’s acquisition of Shell Trinidad Central Block Limited (STCBL) provides a six-month extension beyond the original March 31, 2024, deadline. The transaction, finalized in December 2024, grants Touchstone a 65% operating interest in the onshore Central Block, which includes four producing gas wells and a processing plant. The remaining 35% stake is held by Trinidad’s state-owned Heritage Petroleum. The total consideration is $23 million in cash, plus closing cash and abandonment fund balances from STCBL.

The extension reflects the complexities of securing regulatory approvals and financing in Trinidad’s evolving energy landscape. While Touchstone has secured all necessary regulatory sign-offs and advanced its lending arrangements, the delay highlights the sector’s broader challenges.

Trinidad’s Gas Crisis: A Critical Crossroads

Trinidad’s gas production has plummeted to 2.5 billion cubic feet per day (bcf/day) in 2024—42% below its 2010 peak of 4.3 bcf/day. This decline stems from field depletion, underinvestment in exploration, and delays in major projects like Shell’s Starfish/Dolphin and Woodside’s Ruby. The Central Block’s modest output (though undisclosed) is now critical to stemming the freefall.

The acquisition positions Touchstone as a key player in Trinidad’s gas sector, offering low-decline, cash-generative assets. However, the project’s scale pales against larger initiatives such as Shell’s Manatee (targeting 1.5 bcf/day by 2026) or bp’s Cypre/Ginger (62,000 barrels of oil equivalent per day by 2027). Yet, in a market desperate for stability, even small gains matter.

Risks and Rewards: Beyond the Long-Stop Date

While the May 12 deadline is a milestone, risks loom large:
1. Sanctions and Cross-Border Projects: Trinidad’s hopes for gas revival hinge partly on Venezuelan projects like Dragon, which face U.S. sanctions. A May 27, 2025, deadline for sanctions relief remains unresolved, casting doubt on Trinidad’s ability to leverage those reserves.
2. Deepwater Delays: The Calypso deepwater field (3.2 trillion cubic feet of gas) requires a Final Investment Decision by 2025, but fiscal disputes with the government and potential asset sales by Woodside threaten progress.
3. Market Volatility: Trinidad’s gas is tied to LNG exports and petrochemicals, making it vulnerable to price swings.

Strategic Implications: A Niche Play in a Troubled Sector

For Touchstone, the Central Block represents a prudent, low-risk entry into a jurisdiction with established infrastructure and regulatory familiarity. Unlike high-cost deepwater projects or cross-border ventures, the asset offers near-term cash flow. However, its success depends on Trinidad’s broader ability to attract investment in exploration—something the 2025 deepwater bid round (26 blocks) may address, though fiscal incentives remain uncertain.

Conclusion: A Fragile Equilibrium

The Trinidad Central Block deal’s extension to May 2025 reflects both Touchstone’s resolve and Trinidad’s urgency. With $23 million committed, the project’s completion in Q2 2025 would mark a small but vital step toward stabilizing gas output. Yet, the broader picture remains bleak: Trinidad’s gas reserves are in irreversible decline unless new discoveries materialize.

The stakes are high. If Touchstone secures the Central Block, it gains a foothold in a shrinking market. If not, Trinidad’s gas-dependent economy—and its LNG exports—will face further strain. For investors, the bet hinges on execution: can Touchstone navigate Trinidad’s regulatory and fiscal maze, and will the country’s gas sector find its next lifeline in Calypso or Cypre?

The clock is ticking—not just for Touchstone, but for Trinidad itself.