Exclusive: US issues license to Trinidad and Tobago to develop Venezuela’s offshore gas field

US and Trinidad officials said on Tuesday that the Biden administration has granted a license to Trinidad and Tobago to develop a large gas field located in Venezuelan territorial waters, in another step to ease some sanctions. in Venezuela.

The license, issued by the US Treasury Department at Trinidad’s request and intended to boost regional energy security in the Caribbean, means the island nation can do business related to the Dragon gas field with heavily sanctioned Venezuelan oil company PDVSA.

Prime Minister Keith Rowley, speaking at a press conference in Port of Spain, said Trinidad expects to access 350 million cubic feet of gas per day from the Dragon field.

He said he applied for the license in mid-2022 and received approval after discussing it with senior US officials, including US President Joe Biden, while maintaining an open channel of communication with Venezuelan President Nicolas Maduro.

“The Maduro regime will not be allowed to receive any cash payments from this project,” said a senior US official, speaking to Reuters on condition of anonymity. All remaining US sanctions will remain unchanged and enforced.

The official said the decision was the result of intense diplomacy between Vice President Kamala Harris and Caribbean leaders in an effort to ensure regional energy security and reduce dependence on the resources of other countries, including Russia.

“The US Vice President has been a careful and observant listener,” Prime Minister Rowley said.

PDVSA found reserves of 4.2 trillion cubic feet (TCF) in Dragon, on the Venezuelan side of its maritime border with Trinidad. The project was headed for production over a decade ago, but was held up due to a lack of capital and partners, as well as sanctions.

Under US sanctions, companies and governments must obtain authorization from the US Treasury Department to do business with PDVSA. The Biden administration has granted only a few of these authorizations since taking office in January 2021, most of them on a heavily restricted basis.

The license follows a round of negotiations in November between Maduro’s socialist government and the opposition, aimed at finding a path to new elections. But Maduro, whose re-election in 2018 was widely derided by Western governments as a sham, has resisted bringing his negotiating team back to the negotiating table ever since.

With Maduro’s hand strengthened by divisions within the opposition and his diplomatic isolation eroding in Latin America, it was not immediately clear whether the new US license could help lure him into a new round of talks in Mexico.

Focus on regional energy needs

It appears that one of Washington’s main goals is to respond to US partners in the Caribbean who have asked for help to deal with soaring energy prices in the wake of Russia’s invasion of Ukraine.

“The vice president conveyed to the prime minister that the Treasury Department will take action to help meet the region’s long-term energy needs,” a statement from Harris’ office said, referring to a call with Rowley on Tuesday.

The license will allow PDVSA, Shell Favorite and Trinidad to jointly plan and develop a gas export project after agreeing on outstanding details in the coming days. Rowley said that part of the gas produced should be exported to Jamaica and the Dominican Republic, subject to the terms of the two-year license.

Trinidad is the largest LNG exporter in Latin America, with an installed capacity to process 4.2 billion cubic feet per day (bcfd) into LNG, petrochemicals and power. But its gas production is just under 3 billion cubic feet per day.

Experts say that even with Washington agreeing to Trinidad’s request, it could take years of investment and effort to bring Venezuelan gas to Trinidad and boost LNG exports.

Additionally, with no authorized payments to Venezuela, it could be difficult for Trinidad to strike a deal with Caracas.

The cash-strapped PDVSA is expected to operate the Dragon project on the Venezuelan side. The US mandate could open the door to moving forward with another gas project with Trinidad, in the Laurent-Manati fields.

In November, the United States issued a six-month license to Chevron (CVX.N)allowing it to expand its operations in Venezuela and bring oil to the United States.

The Chevron license was one of Washington’s first significant steps to ease sanctions as an incentive for Caracas to work with opposition leaders.

Additional reporting by Matt Spetalnick in Washington, Mariana Baraga in Houston and Curtis Williams in Port of Spain Editing by Rosalba O’Brien

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