Trinidad and Tobago is preparing to request an extension from the U.S. government on a license that allows Shell and Trinidad’s National Gas Company (NGC) to develop the Dragon natural gas project off Venezuela’s coast, according to sources familiar with the matter. This license is crucial for the project’s advancement and future gas supply to Trinidad.
The existing license, granted in early 2023 as an exemption to U.S. sanctions on Venezuela, has enabled Shell and NGC to conduct planning and preparatory work for the Dragon project. The project aims to deliver gas to Trinidad starting around 2027. A subsequent amendment in 2023 permitted payments in hard currency or in kind to Venezuela and its state oil company, PDVSA, for gas supplies, extending the license’s validity to October 2025.
A license extension is critical for Shell and NGC to commence production after reaching a final investment decision, anticipated later this year. Sources indicate that the Dragon project’s initial production is projected to be approximately 200 million cubic feet per day, significantly bolstering Trinidad’s gas supply.
U.S. sanctions currently target Venezuela’s entire oil and gas sector, necessitating licenses for companies like Shell and NGC to operate and make payments to sanctioned entities, including PDVSA, the Venezuelan government, and its Central Bank. These sanctions underscore the complexities of international energy collaborations and the geopolitical considerations surrounding resource development.
Trinidad and Tobago Prime Minister Keith Rowley recently announced the government’s intention to brief Washington on the importance of maintaining these licenses for regional energy security, highlighting the strategic significance of the Dragon project.
Shell and NGC have diligently assessed the Dragon field using seismic, geotechnical, and well data, confirming the existence of at least 4.2 trillion cubic feet of gas, as initially estimated by PDVSA. Shell has also conducted a comprehensive seabed survey to mitigate potential hazards and is currently determining the optimal drilling locations, pipeline routes, and subsea infrastructure for the project.
Both companies are working in close collaboration with Trinidad’s Energy Minister Stuart Young and Venezuelan Vice President Delcy Rodriguez, who have both visited the survey vessel, underscoring the high-level involvement and commitment to the project’s success.
While NGC deferred inquiries about the license extension to the Trinidadian government, and Shell declined to comment, the outcome of the license extension request will significantly impact the future of the Dragon project and the long-term energy security of the region. PDVSA, Trinidad’s energy ministry, and the U.S. Treasury Department have not yet responded to requests for comment. The decision regarding the license extension will likely hinge on a complex interplay of geopolitical factors, energy needs, and the ongoing situation in Venezuela.
