Shell seeks long-term U.S. license for Dragon gas project in Venezuela
Shell is pursuing long-term license from US before making final investment decision on Dragon natural gas project in Venezuela
According to sources, oil company Shell is pursuing a long-term license from the United States before making a final investment decision (FID) on the Dragon natural gas project in Venezuela.
There are an estimated 4.2 trillion cubic feet of gas in the Dragon Field, which is situated in the Venezuelan seas close to the maritime border with Trinidad and Tobago. This enormous resource is especially important to Trinidad, which is trying to maintain its liquefied natural gas and petrochemical businesses, while Venezuela is considering using it as a possible source of export income.
The development began when the U.S. awarded Trinidad a two-year license to negotiate and construct the Dragon project in Jan. 2023, and Shell was designated as the operator, working with state enterprises PDVSA from Venezuela and the National Gas Company (NGC) from Trinidad.
The license was modified by the United States in Oct. 2023, allowing Venezuela to collect cash payments from gas sales and prolonging its validity until Oct. 2025. The Venezuelan government then approved the project in December, allowing Shell and NGC to begin producing and exporting gas to Trinidad for a 30-year period.
But as Trinidad awaits Dragon’s final due diligence report, or FID, a critical step before project approval and construction can begin, Shell finds itself pressing for a longer-term U.S. license. The business, which is recommending a 15-year license, highlights how important stability is for investments bigger than $1 billion.
Stuart Young, Trinidad’s Minister of Energy, has been in regular contact with the United States and Venezuela over the project’s license and schedule. “Obviously, a two-year license has a window and this is a transaction that will take more than two years,” he said, disclosing his continued efforts.
The destiny of Dragon is entwined with that of Manatee, another Shell gas project in Trinidad’s seas. In order to satisfy Trinidad’s gas demands and begin production, both endeavors are competing, which will create competition in the area.
Stakeholders are watching the discussions closely for any updates, since they might have a big impact on the Caribbean’s energy scene. Shell chose not to comment; we are awaiting comments from PDVSA, NGC, the oil ministry of Venezuela, and US government agencies.
Source: Reuters