Page 5 - LatAmOil Week 06 2023

LatAmOil COMMENTARY LatAmOil

This is true because the waiver is the only instru- The problem is that NGC is not in a position
ment protecting potential investors in the gas to lead the development of Dragon on its own.
project from penalties under US sanctions law. It cannot fund the project without help, and it
But it is also true because the waiver outlines the is also likely to need the expertise, capital and
terms under which Trinidad and Tobago can resources of an international oil company (IOC)
negotiate with Venezuela. with experience in offshore development opera-
As of press time, none of the parties involved tions. NGC cannot meet all of these needs, so the
has divulged full details of the exemption negotiations might slow down considerably if it
granted by OFAC. Rowley revealed on January is the only party across the table from PdVSA.
24 that Washington had agreed to waive sanc- But the two companies never intended to
tions penalties on the condition that Port of develop Dragon on their own. They signed the
Spain make certain that no cash payments were original agreement for the field in 2018 with If the waiver
made to the administration of Venezuelan Pres- Shell (UK), and they are expecting Shell to
ident Nicolas Maduro. He also said that the US remain on board now that the US government applies to
side had granted a licence with a term of only has granted the exemption from sanctions. (For
two years, rather than the 10 years Trinidad and its part, Shell appears to have remained keen; a Trinidadian
Tobago had expected. company spokesperson described the multi-na-
Also on January 26, US Vice President tional as a potential participant in Dragon under firms in
Kamala Harris, who played a key role in the talks the OFAC waiver last week.) general and
that swayed OFAC’s decision, said that Trinidad Accordingly, if the exemption from sanctions
and Tobago had also agreed to send some of the applies to Trinidadian companies more broadly not just NGC,
LNG produced using future production from (and not just to NGC), then NGC might be able
Dragon to other regional markets. These will to team up with Shell’s local subsidiary for talks then NGC
include Jamaica and the Dominican Republic, with PdVSA. That might help speed up the pace
Harris’ office said in a statement. of negotiations – and not just because the IOC might be able
Since then, the Trinidad Express newspa- can compensate for NGC’s shortcomings with to team up
per has reported that OFAC’s licence specifi- respect to funding and other resources. Instead,
cally designates National Gas Co. of Trinidad it is because Shell’s Trinidadian subsidiary also with Shell
and Tobago Ltd (NGC) as the company that operates Hibiscus, a gas field that is close to
has permission to represent Port of Spain in Dragon. for talks with
negotiations on the gas project. However, there Hibiscus lies on the Trinidadian side of the
were hints earlier this week that the exemp- maritime boundary between the two countries, PdVSA
tion might be somewhat broader than that. On while Dragon is on the Venezuelan side. Offi-
February 6, sources close to the talks between cials in Port of Spain want to establish a subsea
Caracas and Port of Spain told Reuters that the connection between the two fields so that Ven-
waiver authorises companies from Trinidad ezuelan gas can be transferred to Trinidad and
and Tobago to do business with the Venezuelan Tobago’s transportation system and onshore
national oil company (NOC) PdVSA, which is a processing plants.
target of the sanctions regime. Under these circumstances, having Shell
involved in the negotiations would probably be
Which Trinidadian companies? a positive thing, at least with respect to keeping
If the Trinidad Express is correct and NGC is up the pace of the talks. But it is still too early to
the only company authorised under the waiver determine whether this will happen. Shell has
to negotiate with PdVSA on the Dragon pro- not yet commented on the matter, and neither
ject, the pace of talks between Port of Spain and have any of the other parties taking parts in the
Caracas may slow down considerably. negotiations. ™

Young (R) and Rodriguez (L) met in Caracas on February 6 (Photo: Twitter/@delcyrodriguezv)

Week 06 08•February•2023 www. NEWSBASE .com P5