THE Dragon gas field proposed deal with Venezuela has come with great expectations and hope, with the announcement of the deal where we heard that T&T has received the US Government’s agreement through a US Treasury Office of Foreign Assets Control (OFAC) waiver to develop the field.
Trinidad can access up to 350 million cubic feet of gas per day from the Dragon field. There is excitement over this development as it can mean much-needed life support for our energy sector.
Trinidad and Tobago is Latin America’s largest liquefied natural gas (LNG) exporter and can process a capacity of 4.2 billion cubic feet in gas into LNG, petrochemicals and power. Its gas production is just under three bcfd now though. However, there have not been any announcements by the Venezuelan Government on this deal. Why? For such a great prospect wouldn’t the Venezuelan Government make a big announcement and have great fanfare over this deal to cement our gas for the future?
With the clause by the US that stipulates that Venezuela will not receive any cash payments on this deal and noting the waiver is only for two years, how exactly would T&T be paying Venezuela for this gas? Would we be paying with toilet paper, onions and garlic?
Anyone that is financing this project would of course look at if the two years waiver is actually possible to get this project started, realise returns on their investment and further assess its ability to see whether gains on their investment are enough should they finance this project.
What this really means is that it does not look feasible at the current stage proposed by T&T under the constraints of the two-year waiver to get investors interested. The experts have said that we need a minimum of at least three years to see any gas from this field and what exactly will be the payback period for investors.
Do we know? Investors will take advantage of better-termed investments than this one under the current conditions. Investors invest where they can get the highest rate of returns in a reasonable timeframe. So this project seems like a non-starter for now. That’s why it’s so important for the Government to move swiftly to ensure a contract with Venezuela on this Dragon gas and make it operational.
Given how difficult it is to deal with Venezuela and the complications with their political stability, we would have expected to hear something from the President of Venezuela by now. Further, it all depends on T&T’s ability to access the natural gas from the Dragon Field and we all know it can mean a major boost to our economic prospects that we so desperately need.
Again it is worrying that we have not seen anything from Venezuela’s President to date, not even mentioning this project and his demands on accessing his gas. Can investors trust Venezuela’s policies for working on this project and seeing returns as well? The sanctions against the Venezuela oil company PDVSA have remained, and there are obviously many hurdles to overcome and the difficulties of dealing with Venezuela are a major obstacle. So we all are hoping that the Government can pull this off. There are many many issues that must be addressed by the Dr Keith Rowley-led Government.
I wonder if this announcement was premature before all these issues were carefully assessed and addressed by this administration. We all wait with bated breath to see how this works and hope that it is not stillborn because we really need this, it’s been so long since we received some good news within the T&T energy sector.
Neil Gosine is an insurance executive. He is also the treasurer of the UNC and a former chairman of the National Petroleum Marketing Company of Trinidad and Tobago. He holds a Master’s in Business Administration MBA, BSC in Mathematics and a BA in Administrative Studies. The views and comments expressed in this column are not necessarily those of AZP News, a Division of Complete Image Limited.
DRAGON is a “feel good moment ” when the country needs one. But reality is very different. Fortunately for PNM most Trinbagonians are not very politically astute. But let us use common sense (came way before book sense).
-How are we going to pay Maduro and the Venezuelan Government? Maduro has made his position clear –
goods and services are not acceptable.
-Who is going to pay for the drilling wells and production wells and platforms? NGC/bpTT/Shell?
-Who is going to pay for the pipeline to Shell Hibiscus Platform? NGC/bpTT/Shell?
-Who is going to pay Shell for the treating of the gas at their Hibiscus Platform? This assumes that they have the capacity to treat an additional 350MMSFCD.
-Who is going to pay Shell for transporting the gas into the NGC pipeline network?
So there is going a little revenue, but not the boom being touted. And that is if the Boards of bpTT/ Shell approve the project.
But we feeling good!