Venezuela, Trinidad gas talks collapse over price

Trinidad and Tobago failed to break an impasse with its Caribbean neighbor Venezuela over the price it is willing to pay for natural gas supply.

Negotiations in Caracas yesterday brought an agreement "closer," but "there remains a number of areas where further work is required," according to a statement from the office of Trinidad's prime minister.

The state-to-state agreement includes Venezuelan state-owned oil company PdV, Trinidad's state-owned gas company NGC and European major Shell whose facilities in Trinidad would receive the gas piped from Venezuela´s offshore Dragon field.

Shell was represented in yesterday's talks by manager of Trinidad operations Derek Hudson, the statement said.

The project involves the delivery of gas from Dragon to Shell's existing Hibiscus platform off northwestern Trinidad, from where it would be tied into NGC´s distribution network.

Dragon would initially supply 150mn cf/d through a 17km flowline across the maritime border by 2020, and later reach 300mn cf/d.

"The main issue is about the price for the gas," Trinidad's energy ministry told Argus today.

Trinidadian officials will return to Caracas in two weeks "to attempt to settle the terms of the agreement," the government statement said. "All parties involved remain committed to the Dragon gas project becoming a reality."

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

Officials in Venezuela´s energy ministry and PdV confirmed that the talks broke down over price.

A Venezuelan energy ministry official told Argus yesterday the Dragon-Hibiscus agreement hinges on the gas price and assurances over the legality of an export deal that would require legislative approval, a mandate clouded by the country´s competing congressional bodies. Even if those matters are resolved, PdV is hobbled by a severe financial crisis exacerbated by US sanctions, and its oil production is tumbling, casting doubt on the company´s ability to execute a gas sales contract.

Although gas production in Trinidad has recovered in recent months, the Venezuelan gas is considered vital to sustaining Trinidad´s gas-based industries, including a four-train liquefaction plant led by Shell, as well as methanol and ammonia plants.