November 20, 2023 11:42 GMT
Venezuela Nears Deal On Dragon Gas Field
Venezuela is nearing to approve a license for Shell and the National Gas Company of Trinidad and Tobago to develop the Dragon gas field, which would add initial volumes of 300mc/d for Trinidad’s LNG production from 2026, sources told Reuters.
- Sources said that some terms still need to be settled but a deal could be signed in the coming days.
- The proposed license would allow an initial volume of 300mcf/d of Venezuelan gas to go to Trinidad for LNG production, starting in late 2026. Trinidad and Tobago has the capacity to process 4.2bcf/d into LNG.
- In February, Venezuela and Trinidad announced to jointly move forward to develop the Dragon gas field after the US granted a license to develop the field in late January.
- Both countries are discussing a 25-year exploration and production license for the Dragon field, which holds up to 4.2tcf of gas and lies in Venezuelan waters near the maritime border.
- Shell would operate the project with a 70% share in the field and Trinidad's NGC would hold the remaining 30% under proposed terms, the people said. Venezuela’s PDVSA would receive cash or a share of the gas production as royalties.
- Trinidad's Energy Minister Stuart Young in early October said the parties had begun price negotiations for Dragon's gas.
- The parties have agreed in principle to a price that would land gas across the border at less than $3/mcf, the sources said.
- PDVSA has pushed for a signature bonus of some $65 million to be paid upfront. But Shell and NGC want to tie any payment to certain milestones, such as first gas, the sources added.
- The parties are considering two separate lines to transport the gas: one partially built by PDVSA to Guiria, on Venezuela's eastern coast. A second line would connect to Shell's Hibiscus field in Trinidad.