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Venezuela gas sales deal by July: Trinidad

18 May 2017 15:37 (+01:00 GMT)
Venezuela gas sales deal by July: Trinidad

Kingston, 18 May (Argus) — Trinidad and Tobago will conclude an agreement by the end of July for natural gas to be delivered from Venezuela's offshore Dragon field, Trinidad's finance ministry said.

The sales agreement is being negotiated by European major Shell, Venezuela's state-run oil company PdV and Trinidad's state-owned gas company NGC, the ministry said.

"To advance this project, a preliminary project agreement between PdV, NGC and Shell was signed in Caracas on 15 March 2017," Trinidad's finance minister Colm Imbert said, according to the statement. "The companies are now actively working towards finalization of a gas sales agreement by July 2017, and advancing other technical aspects of the project."

Shell declined to comment on Imbert's statement.

Neither PdV nor Venezuela has recently commented on the gas project. But most of the Venezuelan oil company's upstream and downstream projects are stalled on a lack of cash, while Venezuela itself is in the throes of widespread violent clashes pitting anti-government protesters against security forces and paramilitary gangs.

Trinidad "continues to observe" political developments in Venezuela and "hopes the agreement will not be affected or delayed as the gas is urgently needed," an official of the country's energy ministry told Argus today.

Venezuela gas supply is critical to replenishing Trinidad's LNG and petrochemicals industry that have sustained routine curtailments for four years on declining domestic gas production.

Production in the first quarter averaged 3.285 Bcf/d, down 8.4pc from a year earlier.

Trinidad's finance ministry says the country should start to receive 200mn-300mn cf/d from Dragon in 2019-20.

The agreement envisages deliveries by pipeline to Shell's Hibiscus platform off northwestern Trinidad, from where the fuel would be tied into Trinidad's gas distribution network operated by NGC.

Dragon forms part of Venezuela's 14.7 trillion cf Mariscal Sucre complex that also includes the Patao, Mejillones and Rio Caribe fields.

Some limited domestic relief from the gas shortage is coming from BP, which launched a compression project last month April that is boosting output by 200mn cf/d.

The UK major, Trinidad's biggest gas producer, is also anticipating first gas in August 2017 from its offshore 590mn cf/d Juniper project.

US independent EOG Resources is scheduled to produce 275mn cf/d from its offshore Sercan field in the second quarter of this year, while UK-Australian BHP will lift production from the Greater Angostura field by 100mn cf/d by August, according to the energy ministry.

A study of the country's energy sector commissioned by the Energy Chamber, a trade association for the energy and petrochemical sectors, suggests that these projects will not end the gas deficit.

The survey by Norwegian consultant Rystad Energy estimates that the decline from fields now in production will be 14pc/yr until 2030.