Shell to Resume Work on Venezuelan Gas Field Amid US License Hopes

Shell plans to resume work on the Dragon gas field off the coast of Venezuela to supply Trinidad and Tobago, as the US administration is expected to issue a new license exempting the project from sanctions. The project would provide gas to Trinidad's petrochemical plants, which rely on gas imports. The new license is part of the dual approach of the Trump administration towards Venezuela, which has revoked oil and gas licenses in April and is now negotiating with companies like Chevron and Shell.

Shell Plc is preparing to resume preliminary work on the Dragon gas field off the coast of Venezuela to supply neighboring Trinidad and Tobago. The move follows the expected issuance of a new license by the US administration, which would exempt the project from sanctions. The Dragon gas field, located in shallow waters between the two countries, would replenish feedstock for Trinidad’s gas-starved liquefaction complex and petrochemical plants, which are significant exporters of LNG, ammonia, and other gas-based products.

The project to develop the Dragon field was halted in April when the Trump administration revoked oil and gas licenses in Venezuela as part of its effort to escalate pressure on the Maduro regime. However, the administration has since shown a willingness to allow oil companies to resume work in Venezuela if they do not pay taxes and royalties to the Venezuelan government in hard currency Shell Nears US License to Export Venezuelan Gas to Trinidad^[1].

Shell and Trinidad’s state-owned National Gas Co. are the main shareholders in the Atlantic liquefaction complex in Trinidad, where gas production has been declining for over a decade. The gas shortage has dented Trinidad’s exports of LNG and petrochemicals, including ammonia used by US farmers.

The Dragon field lies only a few miles from Shell’s Hibiscus platform off Trinidad’s coast. In a Sept. 30 meeting with Trinidadian Prime Minister Kamla Persad-Bissessar, US Secretary of State Marco Rubio expressed renewed US support for Trinidad to access the Dragon gas field, provided there are steps to ensure it does not provide significant benefit to the Maduro regime Young warns Trinidad and Tobago: Dragon faces uphill battle^[2].

The final terms of Shell’s license are still under discussion, with Shell seeking a duration of up to 10 years compared to the original short-term license to facilitate long-term investment. The license would allow Shell to resume work on the Dragon field, which holds more than 4 trillion cubic feet of reserves.

The project faces potential challenges, including the need for clear terms and conditions regarding payments to the Venezuelan government and the political tensions between Trinidad and Venezuela. Former Minister of Energy Stuart Young has warned that the project faces a long road ahead and called for disclosure of the details of the Office of Foreign Assets Control (OFAC) license Young warns Trinidad and Tobago: Dragon faces uphill battle^[2].