Background on Key Players and Relevance
Shell, a major oil and gas producer, is racing to finish a marine study on the Dragon gas field in Venezuelan waters before May’s deadline set by the United States to cancel licenses related to energy projects in Venezuela. Since 2019, U.S. sanctions have required foreign companies to secure American licenses for negotiations, planning, and development of oil and gas projects with the state-owned PDVSA.
Who is involved and why?
- Shell: A multinational oil and gas company with a significant presence in Venezuela. They were granted a 30-year license by Venezuela in 2023 to operate the Dragon field, expecting gas exports to begin the following year for conversion into LNG in Trinidad.
- Compañía Nacional de Gas de Trinidad (NGC): The largest LNG exporter in Latin America and a major global exporter of ammonia and methanol. Trinidad seeks to develop Venezuelan gas fields to counter declining reserves and secure supply.
- United States: Accuses Venezuelan President Nicolás Maduro of insufficient efforts to restore democracy and ensure the return of migrants illegally present in the U.S. The U.S. has imposed sanctions, which Venezuela calls an “economic war.”
Current Developments and Impact
The research vessel Doña José II, flying the Colombian flag, arrived in Venezuela this month to collect data for Shell and NGC to identify drilling sites and design a gas pipeline, should the U.S. permit project development. The Trump administration announced earlier this month the cancellation of a 2023 license granted to plan and develop the Dragon field. Shell and NGC have until May 27 to cease operations in Venezuela.
Why is this project significant?
- The Dragon project is one of the few real opportunities for Trinidad to secure foreign gas supply for its industries while allowing Venezuela to begin monetizing its extensive offshore gas reserves.
- Trinidad, a leading LNG exporter, needs to develop Venezuelan gas fields and border maritime areas to address declining reserves and ensure supply.
Key Questions and Answers
- What is the deadline for Shell and NGC to complete their operations in Venezuela? May 27, as set by the United States.
- Why are U.S. sanctions imposed on Venezuela relevant to this situation? U.S. sanctions require foreign companies to secure American licenses for energy projects with PDVSA, impacting Shell and NGC’s operations in Venezuela.
- What is the significance of the Dragon gas project for both Venezuela and Trinidad? The project offers Venezuela the chance to monetize its offshore gas reserves, while Trinidad seeks to secure foreign gas supply for its industries by developing Venezuelan fields.
