As per the Trinidadian and U.S. officials, the Biden administration has given Trinidad and Tobago approval in order to make use of a key gas resource off the Venezuelan territorial waters, which will further lead to easing some sanctions against that country.
Because of this license, Trinidad will go ahead with the business conduction with Venezuela’s heavily sanctioned state-run oil corporation, PDVSA, in the Dragon gas field, thereby enhancing regional energy security across the Caribbean. The licence was granted at Trinidad’s behest.
Prime Minister Keith Rowley who was at a news conference held at Port of Spain, went ahead and said that Trinidad looks forward to having access to 350 million cubic feet of gas on a daily basis from the Dragon field.
He remarked that he has already given an application for the license somewhere in 2022 and that it was given a nod in the discussion with Americans which included the likes of President Joe Biden while also teaming up with Nicolas Maduro of Venezuela.
Under the condition of non-disclosure of the name, a senior U.S. source told Reuters that the Maduro government will not be given any option to get hold of any financial payments from this project and that all other sanctions shall stay put and be upheld.
According to this anonymous person, all this was a result of considerable diplomacy between Vice President Kamala Harris and Caribbean leaders to assure that there is regional energy security and at the same time low dependency on other countries’ resources, especially those coming from Russia.
Around 4.2 trillion cubic feet (TCF) worth of reserves have been explored by PDVSA at Dragon, which is based at the Venezuelan side of Trinidad’s maritime border. Ten years back, the project was close to going into operations, but due to sanctions, a lack in funding, and also partners resulted in a long break.
Companies as well as countries are required to get a permission from the U.S. Treasury Department in order to transact with PDVSA as a result of U.S. sanctions. Since assuming office in January 2021, the Biden administration has only issued a small number of these licenses, almost as expected under extremely restrictive circumstances.
It was not obvious if this fresh U.S. license could be used to entice Maduro into a fresh round of negotiations in Mexico, with his role becoming more significant by rifts which are taking place among the opposition and also decreasing diplomatic isolation in Latin America.
Regional Energy Needs Focussed
US’s main reason seemed to be to respond to the urge for assistance from the American allies based at the Caribbean who have been dealing with rising energy prices because of the Russia’s invasion of Ukraine.
Rowley went on to say that the licence will help PDVSA, Shell as well as Trinidad to jointly plan and develop a gas export project after willing to specifics which are pending in the days to come. As per the regulations of the two-year license, the produced gas percentage must be given to Jamaica as well as to Dominican Republic.
Trinidad happens to be the largest LNG exporter in Latin America because of the processing capabilities of 4.2bn cubic feet per day into LNG, Petro, and power.
That said, it might take years of investment in order to deliver Venezuelan gas across Trinidad and also elevate the LNG exports, as per experts.
PDVSA, which is already cash strapped, may operate the Dragon project across the Venezuelan side. The US approval can go on to open the door to yet another gas project in Trinidad.
In November 2022, the US issued a six-month licence to Chevron, allowing it to spread its operations in Venezuela and thereby bring the oil to its shores.
As an incentive, this license was one of the first steps from Washington to ease the sanctions on Caracas.