Venezuela gas deal reached: Trinidad PM

Trinidad and Tobago will sign an agreement with Venezuela tomorrow for offshore natural gas supply to the Caribbean state, the office of Trinidad's prime minister said today.

An attempt in June 2018 to conclude an agreement for the delivery of the gas failed because of a disagreement between Trinidad's state-owned gas company NGC and Venezuela's state-owned oil company PdV over the price.

The state-to-state agreement – described by today's statement as "historic" - involves European major Shell whose facilities in Trinidad will receive the piped gas from Venezuela's offshore Dragon field, starting with 150mn cf/d in 2020 and eventually reaching 300mn cf/d.

"A high-level Venezuelan delegation" will attend the signing of the agreement, the prime minister's office said, without indicating whether the event will be in Port-of-Spain or Caracas.

There was no immediate comment from PdV or the Venezuelan government.

The gas from the Dragon field will be delivered through a 17km flowline across the maritime border to Shell's existing Hibiscus platform off northwestern Trinidad, from where it would be tied into NGC´s distribution network.

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

The gas deal is a key part of Trinidad´s strategy to end nearly five years of supply curtailments to critical gas-based industries. The country's gas production has been falling since 2012, when it averaged 4.1 Bcf/d.

Gas output began to rebound in November 2017 on the back of two projects led by leading producer BP that are delivering a combined 790mn cf/d. National gas production averaged 3.68 Bcf/d in January-June, up by 12.5pc year on year, according to energy ministry data.

But the Venezuelan gas is considered vital to sustaining Trinidad´s gas-based industries, including a four-train liquefaction plant led by BP and Shell, as well as methanol and ammonia plants.

"We are relieved the Dragon gas arrangement is being concluded," the energy ministry told Argus today.

"Although domestic output it rising, the country still has a deficit of about 600mn cf/d, and we will need much more for several planned downstream projects including the reactivation of steel production and expanded methanol production."

Trinidad plans to expand domestic gas production to 4.14 Bcf/d by the end of 2021, finance minister Colm Imbert said in May.

The increase in volume – 22pc above 2017 average output – will come from projects being developed by the country's two major producers – BP and Shell, Imbert said.

"The conclusion of the Dragon agreement will allow Trinidad and Venezuela to move ahead with monetizing the significant gas deposits that straddle their maritime border," the energy ministry said.

Venezuela and Trinidad have been trying for eight years to reach an agreement to tap 10 trillion cf of gas in the cross-border Loran-Manatee field, operated by Chevron.