Trinidad weighs gas impact of Venezuela crisis

Trinidad and Tobago is assessing how new US oil sanctions on Venezuela will impact its plan to import natural gas from its tumultuous neighbor.

Gas-short Trinidad and Venezuela signed a term sheet in late August 2018 for Trinidad to purchase 150mn cf/d of gas from the offshore Dragon field starting in 2020, later ramping up to 300mn cf/d.

Trinidad needs the gas to help end curtailments that started when domestic production began to decline in 2011. The shortage has curbed output of LNG, ammonia and methanol.

Trinidad is "seeking advice" to ascertain the effect of the sanctions on the Dragon project, communications minister Stuart Young said this week.

"The government's legal departments are examining the extent to which the sanctions could affect PdV's ability to go through with the arrangement," Trinidad's energy ministry told Argus.

The US sanctions on Venezuelan state-owned oil company PdV are part of US-led efforts to unseat Venezuela's sitting president Nicolas Maduro. The sanctions include withholding payments for purchases of Venezuelan oil in favor of an emerging interim government. The sanctions apply to crude and oil products, and do not mention natural gas.

The US, Canada and most of Latin America recognize National Assembly speaker Juan Guaidó as interim president. Trinidad still regards Maduro as the president of Venezuela, prime minister Keith Rowley said 26 January.

The term sheet for the Dragon project was signed by Trinidad´s state-owned gas company NGC, PdV and Shell, whose offshore Hibiscus platform in Trinidad would receive the Venezuelan gas.

The Dragon gas purchase agreement is "not legally binding although heads of agreement and other documents were signed," Trinidad's energy minister Franklin Khan said 25 January.

A collapse of the Dragon plan would be "a severe setback" for Trinidad, the energy ministry said yesterday.

"We need the gas to return to optimum production for our gas-based industries that have been delivering below capacity for years."

Trinidad´s gas production in January-November 2018 averaged 3.59 Bcf/d, up by 8.2pc year on year, according to energy ministry data.

Rowley's support for Maduro has sparked a diplomatic spat with Washington. US ambassador to Trinidad Joseph Mondello said he was "deeply concerned" that Trinidad was recognizing "the undemocratic and illegitimate government" of Maduro.

Rowley said he "took offense" at Mondello's remarks. "We have preserved the sovereign position of the people of Trinidad," he said.

Trinidad will not support an invasion of Venezuela to topple Maduro, Rowley said, adding that

Trinidad and the US were not "at war" over Venezuela.

"What you have is a difference of opinion. And we maintain without apology that Trinidad is entitled to have a difference of opinion with any country on any matter in the interest of the people of Trinidad."

Trinidad has offered itself as a mediator to settle the political dispute in Venezuela, but Maduro has not contacted the island's government, Rowley said.