Shell Pursues Licence for Dragon Gas Project in Venezuela

Shell plans to restart work on the Dragon gas field in Venezuela to supply gas to Trinidad and Tobago. The project awaits a new licence from the US Trump administration, which would exempt it from sanctions. The Dragon field is crucial for replenishing feedstock for Trinidad, a significant exporter of LNG and other gas-based products. The White House previously revoked oil and gas licences in Venezuela but has since issued a restricted licence to Chevron. Similar licences are expected for Shell and other companies involved in gas projects.

Shell is reportedly close to obtaining US approval to restart work on the Dragon gas field in Venezuela, aiming to supply natural gas to neighboring Trinidad and Tobago. The project, which has been on hold due to US sanctions, is expected to help Trinidad's LNG and petrochemical industries, which have been facing gas shortages.

The Dragon gas field, located in shallow waters between Venezuela and Trinidad, holds reserves exceeding 4 trillion cubic feet. Shell's partner in this project is the state-controlled National Gas Company of Trinidad and Tobago. The project's success is crucial for replenishing feedstock for Trinidad, a significant exporter of LNG and other gas-based products.

The US administration's dual-track strategy towards Venezuela is evident in this move. While US warships are deployed off the Venezuelan coast to combat drug trafficking, the Trump administration is also considering reviving gas projects. In July, Chevron received a restricted license to resume Venezuelan heavy oil production and exports, with similar licenses expected for Shell and other companies involved in gas projects.

Shell aims for a long-term license of up to 10 years to facilitate sustained investment. The company is also working with BP PLC to reinstate its license for the Manakin-Cocuina gas field, which straddles the maritime boundary between Venezuela and Trinidad and Tobago. Both Shell and BP hold major stakes in Trinidad's Atlantic LNG complex, where gas output has been declining for over a decade.

The US Treasury Department, responsible for issuing these licenses, has not commented on the matter. However, US Secretary of State Marco Rubio has expressed support for Trinidad accessing the Dragon field, with conditions that limit benefits to the Venezuelan regime.

In late 2023, Venezuela's Oil Ministry awarded Shell and the National Gas Company of Trinidad and Tobago a 30-year production-sharing contract for the Dragon gas field. The initial terms were settled in 2018, but progress stalled after US sanctions were imposed in January 2019 to challenge Nicolás Maduro's government in Venezuela.

The Dragon gas field is located just a few miles away from Shell's Hibiscus drilling platform off the coast of Trinidad. The project is expected to bring tangible benefits to Trinidad, helping to address the supply shortages that have hindered exports of Trinidadian LNG and petrochemical products.