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Despite Trinidad support of Venezuela regime ties omit natgas for now

OGJ

LNG instalations

By Canute James and Patricia Garip/Argus

PORT SPAIN/SANTIAGO

Petroleumworld 06 01 2020

Trinidad and Tobago declared explicit support for Venezuela's US-sanctioned government this week, but the political ties will not revive natural gas cooperation in the near term because industrial demand has crumbled.

Venezuela's vast untapped offshore gas deposits and cross-border fields have long been seen as vital to replenishing supply to Trinidad's Atlantic LNG complex and other gas-based industries, which have been subject to domestic supply curtailments for years.

But Trinidad's beleaguered industries now have more gas than they currently need following the partial shutdown of petrochemical and fertilizer industries in recent months because of falling demand from the Covid-19 pandemic.

This market dynamic wipes out any short-term push to access Venezuelan gas. Back in 2017, Venezuela's state-owned PdV (PDVSA) , its Trinidadian counterpart NGC and Shell struck a preliminary deal to develop gas from Venezuela's Dragon field. An initial 150mm cf/d of gas would be transported through a planned flowline to Shell's Hibiscus platform off Trinidad and distributed by NGC. Shell was the key actor, starting from the wellhead to Atlantic LNG, in which it is the leading shareholder.

The deal collapsed in 2018, in part because of disagreement over price. The following year, the US imposed oil sanctions on Venezuela. Even though these did not directly target gas, the suite of US sanctions including financial sanctions levied in 2017 was sufficiently broad to discourage any cooperation.

Nonetheless, Trinidad, like other Caribbean countries with traditional commercial ties to Caracas, has resisted US pressure to recognize Venezuelan opposition leader Juan Guaido as Venezuela's interim president, in place of UN-recognized President Nicolas Maduro.

"Notwithstanding the difficulties within Venezuela, Trinidad and Tobago stands on solid ground in recognizing the government led by President Nicolas Maduro as the legitimate government of Venezuela," Trinidad foreign minister Dennis Moses told local senators on 26 May, citing the position of the UN and Caribbean trade group Caricom.

Rare spat

Trinidad's ties to Venezuela have been in the spotlight since a 27 March visit by Venezuela's US-sanctioned executive vice president Delcy Rodriguez, who met with Trinidad's prime minister Keith Rowley with the official aim of discussing pandemic aid.

In a rare public spat, US ambassador Joseph Mondello accused Trinidad of breaching the 1947 Rio Treaty, under which an attack or threat of aggression against one of the hemisphere's signatories is considered an attack against of them. Moses said Trinidad is not bound by the decisions taken by signatories of the treaty, as they relate to travel bans and sanctions against Venezuela.

The row deepened in early May after a gasoline cargo that loaded in Trinidad was diverted to Venezuela even though it had been originally bound for Aruba. Trinidad's state-owned fuel trading company Paria denied any responsibility.

For now, Trinidad's energy ministry says a February decision to develop the country's side of cross-border maritime gas deposits on its own, without cooperation with Venezuela, remains unchanged.

"The natural gas projects involving Venezuela were changed earlier this year so that they could be expedited to our benefit," the ministry said. "The situation remains the same and there are no new initiatives in this regard."

Under a preliminary agreement, Shell would develop Trinidad's share of 2.71 Tcf on its side of the 10 Tcf Loran-Manatee field, with production projected to start in 2025 at 270mm-400mm cf/d.

By Canute James and Patricia Garip from Argus Media.

argusmedia.com
05 29 2020

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