Exclusive: U.S. issues license to Trinidad and Tobago to develop Venezuela offshore gas field

WASHINGTON/PORT OF SPAIN, Jan 24 (Reuters) – The Biden administration has granted a license to Trinidad and Tobago to develop a major gas field located in Venezuelan territorial waters, U.S. and Trinidadian officials said on Tuesday , which means further relief from some sanctions. in Venezuela

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

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

It said it applied for the license in mid-2022 and won approval after discussing it with senior US officials, including US President Joe Biden, while keeping a channel of communication open with the Venezuelan president, Nicolas Maduro.

A senior US official, speaking to Reuters on condition of anonymity, said “the Maduro regime will not be allowed to receive any cash payments from this project” and that all remaining US sanctions would remain without changes and will be applied.

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

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“The Vice President of the United States has been an attentive and engaged listener,” said Prime Minister Rowley.

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

Under the 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 such licenses since taking office in January 2021, most of them very narrowly.

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 2018 re-election was widely derided by Western governments as a farce, has resisted sending his negotiating team back to the table since then.

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

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REGIONAL ENERGY NEEDS IN FOCUS

One of Washington’s key goals appeared to be a response to US partners in the Caribbean who have asked for help to deal with high energy prices following Russia’s invasion of Ukraine.

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

The license will allow PDVSA, Shell ( SHEL.L ) and Trinidad to jointly plan and develop a gas export project after agreeing on pending details in the coming days. Some of the resulting gas is to be exported to Jamaica and the Dominican Republic, under the terms of the two-year license, Rowley said.

Trinidad is Latin America’s largest exporter of liquefied natural gas (LNG), with installed capacity to process 4.2 billion cubic feet per day (bcfd) of LNG, petrochemicals and power. But its gas production is just under 3 bcfd.

Even with Washington granting Trinidad’s request, it could take years of investment and effort to bring Venezuelan gas to Trinidad and boost LNG exports, experts say.

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Also, without authorization of payments to Venezuela, it could be difficult for Trinidad to reach an agreement with Caracas.

Cash-strapped PDVSA is expected to operate the Dragon project alongside Venezuela. The US authorization could open the door to another gas project with Trinidad, in the Loran-Manatee fields.

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

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

Reporting by Matt Spetalnick in Washington, Marianna Parraga in Houston and Curtis Williams in Port of Spain Editing by Rosalba O’Brien

Our standards: the Thomson Reuters Trust Principles.

Marianna Parraga

Thomson Reuters

Focused on sanctions related to energy, corruption and money laundering with 20 years of experience in the Latin American oil and gas industries. Born in Venezuela and based in Houston, she is the author of the book “Oro Rojo” about the troubled Venezuelan state company PDVSA and the mother of three children.

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