Venezuela

Dragon Deadlock Defused

Maduro criticizes US cash-less authorizations to break Dragon Deadlock

February 3, 2023 by Marianna Parraga

President Nicolas Maduro delivered a speech in front of the Venezuelan Supreme Court of Justice magistrates during the opening of the new court term, in Caracas, January 31, 2023.

CARACAS, Feb 2 (Reuters) – President Nicolas Maduro lambasted U.S. licenses barring companies doing business with sanctioned Venezuelan state firms from paying cash to his administration.

Washington last year authorized U.S. and European firms to resume taking Venezuelan crude oil on the condition no funds be paid to Venezuela.

Last week, the United States authorized Trinidad & Tobago to import gas from a Venezuelan offshore field and barred cash from changing hands. The permits were part of U.S. President Joe Biden’s move to encourage political talks between Maduro and the Venezuelan opposition with the main goal of securing a fair presidential election.

Maduro castigated the U.S. Treasury Office of Foreign Assets Control (OFAC), which issued the licenses and said it tries to dictate how to do business with Venezuela to state and private companies.

“They tell a country it has permission to negotiate with Venezuela, but it cannot pay in dollars or any form of cash. It must pay with food or products. That is colonialism. It is a joke to sovereign countries. I call sovereign countries and governments in America and the Caribbean to denounce this colonial model. We do not accept it, we will go on our way.”

Maduro did not elaborate on any coming actions. Venezuela has not said publicly if it will negotiate with Trinidad, following the license.

 

 

US approves Trinidad-Venezuela Dragon talks

The gas field could sustain Trinidad and Tobago LNG industry

The US treasury granted Trinidad and Tobago a licence to negotiate with OPEC founder Venezuela to develop the Dragon gas field in Venezuelan waters. The Caricom founder hopes access to Venezuelan gas will offset declining domestic production and shore up its LNG output but hurdles remain over payment.

Dragon holds approximately 5–10tn ft³ (141.6–283.2bn m³) of gas.

T&T Energy Minister Stuart Young, said the field’s resources have been “proven” by historical Venezuelan exploration, including the drilling of three wells at Dragon.

 

NGC endorses Dragon field project

Jan 27 2023

NGC welcomed US government approval of development of the Dragon Field via an OFAC Waiver to T&T’ from sanction, with specific terms to be finalised.

“NGC stands prepared to play its part in supporting GORTT in the resumption of the Dragon Project and is excited to work together with both Shell and GORTT to bring gas from the Dragon Field to T&T in the shortest possible timeframe.

The company reaffirms its commitment to work closely with GORTT and other stakeholders in the pursuit of maximising and leveraging opportunities for the resilience and sustainability of T&T’s energy sector that will ultimately serve the national interest.“

“These recent developments are viewed as a positive step in the overall efforts to secure future gas supply for the local energy sector which augurs well for the benefit of the people of T&T.

“NGC notes that the Prime Minister has indicated the terms of the license are still being finalised and the company anticipates discussion with GORTT and the Ministry of Energy and Energy Industries on the next steps for the development and commercialisation of the Dragon Field.

As such, NGC will refrain from making any premature statements on the resumption of the Dragon Project or pre-empt such terms,”

Energy Minister Stuart Young stated that Venezuela will be adequately paid for the gas although there are non-cash stipulations.

“As the prime minister said the Venezuelans obviously are going to be paid and compensated for their gas and those are the discussions that we are now having with Venezuela and that we were having with Venezuela before. There are ways that this can be done by the provision of fuel, LPG, by the provision with other products. So this is not a taking of gas from Venezuela without the requisite, fair, and proper compensation to Venezuela. It is not going to be in cash and these discussions have to take place now but we expect it to go well because it will benefit both Venezuela and T&T and the wider region, the Caricom region and even potentially Europe and other places.”

Finance Minister Colm Imbert took aim at some of the naysayers to the deal.
“The approval by the US of the supply of gas from the Dragon Field has confused the critics, one of whom got so befuddled that he said we have nothing to get from this, in complete denial of the fact that T&T earns billions from the supply of natural gas to PetChem companies.”

 

 

Business hails Dragon sanction waiver

Jan 27 2023

Business groups across the country continued rejoice after the United States government granted a licence allowing T&T to develop Venezuela’s Dragon Gas Field.

The American Chamber of Commerce of T&T welcomed the decision by the Biden-Harris administration and congratulated the T&T government for their successful lobbying, led by Prime Minister Dr Keith Rowley and Energy Minister Stuart Young.

“This demonstrates how pivotal leadership around a clearly defined objective can be.”

Praising the work of US Ambassador Candace A Bond and the US Embassy in T&T, Amcham T&T is “optimistic that this license will strengthen our nation’s energy security, which will also, prove beneficial to other countries in this hemisphere and beyond. This new development will allow some of the pre-work to be progressed so it is a very positive step and we are optimistic that the details that would allow gas to flow can be worked out in short order.”

Vivek Charran, Confederation of Regional Business Chambers chairman,, commended the development and sought urgent action to make maximum use of the opportunity.

“The CRBC thanks the United States Government, and in particular Vice President Kamala Harris for her committed efforts in granting this sanctions waiver. The Government has to move with haste and speed to have all the necessary approvals from the international institutions (regarding how to navigate the international sanctions waiver) and the local regulatory bodies.

One of our nation’s concerns is continuity and sustainability of gas supply and this is my key reason for urging Government to move at a quick pace. The Ministry of Energy has to have a thorough but fast turnaround on bid evaluations, and announce winner(s), if any – within three/four months. On top of that, it is also critical for Government to monetise the gas reserve that is within the Dragon field, as this will be of significant benefit to the people of T&T.”

Charran urged Minister Young to meet all state agencies involved in these processes, including the EMA, Customs Division, Town and Country Division, NGC and Heritage Petroleum, to ensure they are on the same page with regard to this goal and have a defined method to achieve successful action on the opportunity

 

Ramnarine predicts Dragon gas in TT by 2027

Kevin Ramnarine congratulated the Prime Minister in staying the course on the Dragon gas deal between TT and Venezuela and estimates that first gas will be pumped within three to four years. A day after Rowley announced that the US Office of Foreign Assets Control (OFAC) granted TT a waiver on sanctions imposed on Venezuela, allowing TT to extract gas from the OPEC founder, the former PP energy minister said the real victory is that the two-year license is just the beginning of possibly a longer agreement where TT can have years of a proven and reliable source of natural gas.

“The question that everybody wants to know is when is this gas going to arrive in Trinidad Tobago? I have said, all things being equal, three to four years. I would say three and a half years. A lot of things have to happen between now and then. One is the commercial arrangement between Shell, the National Gas Company (NGC) and the Venezuelan government and that in itself will take time to negotiate.”

Ramnarine warned that getting a project to a final investment decision is another time-consuming aspect that could take close to four years. His three-to-four year estimation is based on everything falling into place as this deal has been some 20 years in the making, with late prime minister Patrick Manning talks with late Venezuelan president Hugo Chavez. Venezuela is yet to comment on the deal.

“It’s a step in the right direction for TT. It means that it is taking us into a new phase of our energy sector where we go from an energy sector based on natural gas that was produced within our geographic borders, to one where we import natural gas via pipelines from Venezuela. We have to consider how we derive the maximum benefits from that arrangement.”

Over the past 12 years, depleting gas reserves created an “existential crisis” for companies in the energy sector such as Point Lisas resulting in the closure of Train One at Atlantic LNG.

On the revelation that TT had asked for a ten-year license but was only given two years, Ramnarine suspects this was the USA being cautious in lifting sanctions against Venezuela. The two-year license may persuade Venezuela to move in the direction that the US wants regarding dialogue between the Nicolas Maduro government and the Opposition and possibly fresh elections.

Stakeholders agree that ending the 20-year Dragon Stalemate and overcoming compensation constraints will take years, as advised by Kevin Ramnarine, an experienced petroleum engineer and minister. Authorities must put their best feet forward to avoid risk.

NGC depends on buying gas from BPTT and Shell and selling gas to downstream users like Proman. Shutdown of four plants cost Government US$1.3 million a day in revenue and NGC lost consumers for almost quarter of a billion standard cubic feet of gas a day, 15 per cent of the gas at Pt. Lisas nerve centre of domestic gas . NGC tried to re-negotiate contracts but upstream producers wanted to negotiate matters outside NGC’s remit, which the Government discusses on an ongoing basis. Downstream producers work with NGC and GORTT to secure the critical short-term relief pricing measures required to stabilise the sector, amid risk to continuing in business.

T&T sells most products to PRC. At US$60 per metric tonne for freight, plants earn on average US$120 per metric tonne, with a break-even of US$250 per metric tonne, half the costs of production for T&T natural gas, one of the highest among world petrochemical producers.

Prodigal NGC squandered TT$240 million knowing there was no gas to supply Train 1. 7 major Pt. Lisas Industrial Estate Plants closed /halted operations under the regime in 2015 – 2020..

In a high natural gas pricing environment , Nutrien shut a plant and Methanex mothballed one plant. Yara, Methanex Titan and other plants closed due to gas curtailment caused by greed for more petrochemical plants, preventing Atlantic selling most of its LNG output.

Without affordable natural gas and electricity prices, Arcelor Mittal closed its steel plant in 2016. New owner T&T Iron and Steel signed a term sheet agreement with NGC for 9 million standard cubic feet of natural gas per day (mmscf/d) from 2023 rising to 55 mmscf/d at full operation by 2025/2026 but requiring reliable gas supply, it is doomed.

Natural gas production is below 75 per cent of installed capacity On 7 December 2022 media reported 7 major petrochemical plants were shut or halted as joblessness followed closure of industries at Pt. Lisas, a major contributor to foreign exchange,

Two recent bid rounds were disappointing. The Petrotrin debacle still rankles as the sector is stymied by unemployment, HSE flaws in Paria, a rusting refinery with inadequate local supply and a militant union.

The Gas Gang hid details of the cost of the expanded NGC share grab in the semi-nationalisation of Atlantic. Observers fear that public funds were again sacrificed on restructuring to sanitise NGC amid falling prices for LNG and long lead times for domestic gas output as the industry proceeds with transition.

 

 

Minister: Ramnarine clueless on Dragon deal

Energy Minister Stuart Young said former energy minister knows nothing about the issue after Kevin Ramnarine wisely commented that the revived Dragon gas deal may take as much as four years before gas arrives in TT,

“Kevin Ramnarine is a failed minister of energy. His mismanagement of the country’s gas sector left NGC with over $9 billion in claims. He never negotiated a gas supply contract and left NGC rolling month-to-month contracts with off takers. He has no clue about Dragon and its development and certainly is not an authority on how it will be produced. It is premature at this time to state timelines, save to say that the granting of the OFAC license is monumental and great for Trinidad and Tobago. As we can provide more specifics we will.”

The hubristic minister was responding to questions following Ramnarine’s statements that TT may have to wait three to four years before gas is received from the Dragon field. Ramnarine opined a lot still has to be done before the gas gets flowing.

“One is the commercial arrangement between Shell, the National Gas company (NGC) and the Venezuelan government. That in itself will take time to negotiate.”

Getting a project to a final investment decision is also time consuming and could take years to complete after the Prime Minister announced that the US exempted TT from sanction to produce gas from Dragon field.

 

Stuart and Delcy discuss Dragon in Caracas

Feb 07 2023

On 6 February 2023. Vice President, Delcy Rodríguez of Venezuela met a delegation led by Energy Minister Stuart Young in its first high-level visit following the U S’ waiver of sanctions clearing the way for development of the Venezuelan Dragon Gas field.

T&T ambassador to Venezuela Edmund Dillon and President of the NGC Mark Loquan met Venezuelan oil minister Tareck El Aissami in the meeting to deepen strategic relations and boost the cooperation between Venezuela and T&T.

Both countries historically promoted alliances in energy and gas as the engine of the economy. The economic-commercial relationship between the two countries is framed within the strategic cooperation for the development of projects in the field of hydrocarbons. The meeting takes place as part of the Bolivarian Peace Diplomacy and the occasion is propitious to review the ties of solidarity, mutual respect and bilateral cooperation between both neighbouring nations.

Venezuela has “ratified its will to strengthen the cooperation and brotherhood agreements with the neighbouring Caribbean republic, for the benefit of both peoples and nations.”

Prime Minister Dr Keith Rowley told Parliament government was in touch with Venezuela and the first meeting would begin negotiations.

On whether the Venezuelan Government officially agreed to terms and conditions stipulated by the US, he said, “This is a matter that requires state-to-state communication, the first hurdle has been crossed. We are in touch with Venezuela, we have meetings scheduled and negotiations ahead of us therefore I can say nothing further at this time.”

The US license means Trinidad and Tobago can resume doing business with heavily- sanctioned Venezuelan SOC PDVSA, though the Maduro regime will not be permitted to receive cash payments from this project.

The Venezuelan Government made no public statements specific to T&T use of the licence granted by the US. In a broadcast, President Nicolas Maduro condemned the decision by the United States to grant licenses to countries and companies to resume taking crude oil from Caracas on the condition no funds be paid to Venezuela, without elaborating further.

“They tell a country it has permission to negotiate with Venezuela, but it cannot pay in dollars or any form of cash. It must pay with food or products. That is colonialism. It is a joke to sovereign countries. I call on sovereign countries and governments in America and the Caribbean to denounce this colonial model. We do not accept it, we will go on our way.”

PDVSA found reserves of 4.2 trillion cubic feet (TCF) in the Dragon field, on the Venezuelan side of its maritime border with Trinidad. The project was headed for production over a decade ago, but stalled over sanctions and lack of capital and partners.

 

 

Comments at Guyana Energy Expo 14th – 17th of February

Feb 15 2023

Asked for an update about the Dragon deal following his participation in a panel about regional collaboration at the Guyana International Energy Conference and Expo 2023, TT Energy Minister Stuart Young said all will be revealed at the right time.

“At the appropriate time enough will be said about Venezuela, Of course, it was a cordial, excellent meeting in Venezuela and they are going to continue.”

On February 6 Venezuela’s Vice President, Delcy Rodríguez, warmly greeted Minister of Energy Stuart Young, before their meeting on 6 February 2023. Young led a delegation for the first high-level visit to Caracas following the U S waiver of sanctions against Venezuela, clearing the way for development of the Dragon Gas field.

Venezuelan media showed T&T ambassador to Venezuela Edmund Dillon, President of the NGC Mark Loquan and Venezuela’s oil minister Tareck El Aissami at the meeting

Prime Minister Keith Rowley mentioned the Dragon Gas deal with Venezuela in his address to the Guyana conference. on 14 February.

“We also executed a Heads of Agreement with the Bolivarian Government of Venezuela for the development of the Dragon Field located in the eastern end of the Mariscal Sucre area of Venezuela to facilitate the sale of natural gas for supply, by pipeline, to the domestic market and the LNG facility located in T&T.

The progress in the development of the Dragon field was disrupted and delayed by US sanctions against Venezuela. Following the request by the Government of T&T, the US Treasury Department recently granted the Government an initial two-year (OFAC) licence to develop the Dragon field with a view to enhancing Caribbean Energy security.”

T&T provides a viable option for countries that wish to optimize the monetisation of their hydrocarbon resources without incurring substantial capital expenditure.

“The proposed Dragon Gas Project with Bolivarian Government of Venezuela is an example of Government to Government co-operation in the monetizing of natural gas resources. We are open to discussion with our other Caribbean neighbours on the monetization of their hydrocarbon resources in Trinidad and Tobago.”

Rowley also mentioned the Pointe-a-Pierre refinery.

Asked if T&T hoped to sell the refinery to Guyana, Young said,

“The Prime Minister has again drawn reference to the fact that in T&T there is an oil refinery that remains available. We are constantly, through TPHL (Trinidad Petroleum Holdings Ltd) considering proposals we continue to receive but if Guyana is interested that is something we have told them we would welcome.”

Tareck El Aissami and Delcy Rodriguez are sanctioned by USA, Canada, EU and Switzerland. Mexico sanctioned Delcy Rodriguez.

 

 

Geopolitical constraints dog Dragon Stalemate

Flashback: August 2018. Prime Minister Dr Keith Rowley and Venezeulean President Nicolas Maduro shake hands after signing terms of the development of the cross-border gas from the Venezuelan Dragon Gas Field between NGC, PDVSA and Shell in Venezuela, .

The “Dragon can dance” if Trinidad and Tobago overcomes the significant geopolitical constraints involved in the project, says Opposition MP Rodney Charles, as Energy Minister Stuart Young was in Venezuela for negotiations on the Dragon Gas Field project. This country has been granted a two-year licence by the United States to develop the field.

“We all want Dragon Gas to succeed but before we celebrate and count our chickens before they are hatched, we must carry out the mandatory hard-nosed risk assessments. Everyone wants Trinidad and Tobago to successfully engage Venezuela’s abundant energy resources but it must be premised, not on wishful thinking or PNM’s 2025 electoral considerations or limited research, but on realistic, hard-nosed geopolitical and economic calculations.”

The Foreign Affairs Ministry must keep Cabinet fully briefed on the broader geopolitical implications “before we rush in where angels fear to tread and spend our limited foreign exchange on a monumentally risky project.”

“It would be considerably wiser to hedge our bets by significantly deepening energy relations with more politically stable Suriname and Guyana with whom we share many common interests.”

He cited the following factors:

• US President Biden is constrained by powerful domestic forces. Florida’s 30 votes in the US Electoral College are crucial to his 2024 electoral prospects. With over 1.5 million Cubans and an estimated 250,000 Venezuelans who are uncompromisingly opposed to socialism, Biden can kiss his chances goodbye of winning Florida if he ever fully engages Venezuelan President Nicolas Maduro.”

• The Republicans now control the US Congress. Maxine Waters, reportedly a strong supporter of Dragon Gas, no longer chairs the US House Financial Services Committee.

• The second area of geopolitical concern is Russian influence on Maduro. Venezuela’s estimated US$100 billion debt to Russia and China severely limits its ability and that of PDVSA to freely engage in Dragon gas. Russia is also Venezuela’s most important trading and military ally.

• T&T’s Foreign Ministry may be advised to have off-ramp discussions with Russia which have little interest in the US desire to increase supplies of non-Russian gas on the world market.

• Government has to think long-term about increasing T&T’s reliance on Venezuela.

 

 

OTHER TT COMMENTS ON DRAGON

Government’s successful negotiations, resulting in a two-year licence given by the US Treasury Department, allow it to conduct business related to the Dragon Gas Field in Venezuelan territorial waters.

1.The Prime Minister’s achievement in getting the licence so the Dragon Field business can proceed is commendable, even though the permit is for two years. The opened door is essential, presenting an opportunity for negotiations with Venezuela to advance the gas project. On reflection, we should be in a favourable position with the Venezuelan Government today because of our unwavering position of neutrality in the face of local Opposition and international pressures to support Guaidó in the height of the explosive Maduro and Guaidó power struggle. As the situation evolved, growing international disillusionment with Guaidó’s failure to seize control resulted in support for him whittling away.
2. On the announcement of the US sanctions waiver granted to GORTT in respect of the Dragon gas field in Venezuela’s territorial waters., prudence and diplomacy should have called for a cautious approach including a quiet conversation with Venezuelan authorities prior to announcing the waiver. President Maduro’s forceful repudiation of US waivers as colonialism and an affront to its sovereignty could sour future negotiations between our countries.

 

 

Dragon is major boost

Jan 25 2023

The United States licence allowing T&T to develop Venezuelan gas in the Dragon Field is a much-welcomed achievement ,borne out of persistence and determination of the Government to make it happen through extensive diplomacy.

Much maligned in recent times for the high crime rate and rising cost of living, this is a high mark for the regime.

It is, however, only the beginning, as there are still obstacles to overcome, including how T&T and Venezuela will work out the benefits for Venezuela in light of the announcement that cash will not be exchanged for the gas T&T will be developing.   Therefore, while excited about the prospects, citizens need patience before revenues materialise from this complex project that will not deliver immediate gains.

Development of infrastructure for gas to flow through a 17-mile pipeline from the Dragon Field to the Point Lisas Industrial Estate will take time. Stakeholders are buoyed by the green light, five years after an agreement was signed with Venezuela to launch the Dragon Field partnership and two years after it was halted by sanctions imposed by the Trump administration.

1. 1. 1. Faith and courage to pursue the deal when all seemed lost should be commended.
      2. With the economy struggling to recover from the pandemic, a ray of hope existed because of ongoing and persistent talks with high-level United States officials.
      3. The PM and Energy Minister travelled several times for direct negotiations in Washington where Government paid lobbyists to advocate on the country’s behalf.

Other Caribbean leaders were credited for efforts toward achieving this goal. The region stands to benefit from this development  as T&T strengthens its position to supply more gas, thereby decreasing regional reliance on energy resources from other countries, including Russia.

Regional leaders held extensive discussions with US Vice-President Kamala Harris , centred around Caribbean energy security. While Caricom awaits fine details on how this licence agreement will benefit T&T and the region. , a portion of the gas developed from the Dragon Field will be exported to Jamaica and the Dominican Republic.

After the Finance Minister announced in December 2022 that T&T had registered its first fiscal surplus in 14 years, citizens expect a rise in investor confidence to spark the revival of major sectors left dormant during the pandemic period. Brighter days may lie ahead.

 

 

Shell TT gratified by Venezuela talks

Prime Minister Dr Keith Rowley met vice president and country chair of Shell TT, Eugene Okpere at the Invaders Steel Orchestra’s sponsors night.  Speaking at the Invaders Steel Orchestra’s sponsor’s night at the Queen’s Park Oval, Port of Spain, a day after reports of the delegation’s visit to Venezuela, Vice president and country chair of Shell TT Eugene Okpere was satisfied with conversations between Trinidad and Tobago and Venezuela.

“It’s still early of course, but we would like to support where we can.” Okpere did not comment on the status of the Dragon gas deal which is expected to be finalised after US approval of licence to explore the field off Venezuela which stalled in 2018 due to US-imposed sanctions.

Okpere commented as a TT delegation, including Energy Minister Stuart Young, TT ambassador to Venezuela Edmund Dillon and NGC president Mark Loquan visited Venezuelan Vice President Delcy Rodrigues in Caracas earlier this week.

While the Venezuelan government did not specify that talks included conversations on the Dragon Gas deal, in which TT and Venezuela could produce an estimated 150 mscf/day in a joint venture, it did report in its state media that TT and Venezuela have energy agreements regarding hydrocarbons and joint projects.

“Cordial work meeting to strengthen our relations of friendship and cooperation,” was how the Venezuelan Vice President described the meeting.

Venezuelan state media Vtv reported that Rodrigues welcomed the delegation as part of a Bolivarian peace diplomacy exercise. During the meeting, bilateral co-operation was discussed.

In January, Government announced that a US licence paved the way to revive the deal to operate in the Dragon gas field on the TT/Venezuelan border on condition that Venezuela could not be paid any cash but rather be paid in goods. This is similar to licences issued in Europe for companies pursuing oil and gas deals in Venezuela.

Venezuelan President Nicolas Maduro knocked US conditions on its relations with companies describing the trade of oil and gas commodities for food and other items as “colonialism.”

Asked about the visit to Venezuela, Loquan deferred all questions to Government.

Venezuela did not reject licence waiver

Prime Minister Dr Keith Rowley and Venezuelan President Nicolas Maduro shake hands after an agreement to negotiate a gas exploration agreement at Miraflores Palace, Caracase on December 5, 2016. The agreement for the Dragon gas deal was signed on August 25, 2018. –
in the House of Representatives, the Prime Minister dismissed Opposition UNC claims that the Venezuelan government opposed the US Office of Foreign Assets Control (OFAC) granting TT a waiver to develop the Dragon natural gas field, is located in Venezuelan maritime waters. The two-year waiver was granted on January 25.

Rejecting claims from Naparima MP Rodney Charles that President Nicolas Maduro rejected the waiver, Rowley said,

“The first hurdle has been crossed. The government of Venezuela has made no public statement specific to TT’s use of the OFAC licence. TT is in touch with Venezuela. We have meetings scheduled and negotiations ahead of us, therefore I can say nothing further at this time.”

Rowley dismissed a question from Pointe-a-Pierre MP David Lee about when TT could receive its first supply of natural gas from the Dragon field.

“We are not anywhere about talking about first gas. We have to wait for other developments from the operator, in this case Shell, to give us those details now that we are able to proceed in some way. There are some significant negotiations to take place.”

Speaker Bridgid Annisette-George ruled a subsequent question from Lee about Government being unable to complete the negotiations Rowley referred to within the two-year period of the waiver as “out of order” based on Rowley’s earlier responses.

Reuters reported Maduro called conditions barring foreign companies doing business with its state-owned oil and gas entity, from paying cash, “colonialism.”

Reuters said Maduro criticised the US Treasury’s Office of Foreign Assets Control (OFAC), accusing it of trying to dictate how private companies do business with Venezuela.

“They tell a country it has permission to negotiate with Venezuela, but it cannot pay in dollars or any form of cash, it must pay with food. That is colonialism,” Maduro said, according to the Reuters report. The report did not mention the TT/Venezuela Dragon gas deal.

Last year, Washington gave authorisation to European companies to again trade oil and gas with Venezuela, but was limited by the cash restriction. Similarly, in the Dragon gas deal, which was revived when the US gave TT permission to operate in the field, part of the terms is that Venezuela could not be paid in cash by TT. Announcing the exemptions in January, the Prime Minister said it would not hinder the deal, as when the Venezuelan government asked TT to purchase necessities on its behalf. With the Dragon gas deal, a similar approach could be taken.

The US$1 billion deal was signed between TT and Venezuela in August 2018 with energy giant Shell, Venezuela SOC PDVSA and TT’s National Gas Company (NGC).

The Dragon deal meant TT developing the field, estimated to produce approximately 150 million standard cubic feet of gas a day. The gas would be imported through a billion-dollar pipeline to the Hibiscus platform off the northwest coast of TT. The platform is jointly owned by the TT government, NGC and Shell. The deal was left in limbo after the US imposed sanctions on Venezuela in 2019.

 

Counting Dragons before they hatch

by Mariano Browne
Feb 05 2023

Predictably, the Prime Minister was asked by the Opposition in Parliament for a date by which the Dragon gas field would begin production and the “first gas” received in T&T.

Wisely, the PM avoided a direct answer. Whilst not making a clear statement, he made it obvious that the date for the first gas is unknown and he could not give a timeline on when the gas would be delivered. Standing between today and the delivery of gas are all the negotiations and the agreements required to make gas extraction from the Dragon Field a reality. Like other previous announcements, the news of the sanction’s waiver by the US authorities gave the false impression that access to the “Dragon” was a done deal. Much remains to be done.

Extracting oil or gas is based on the acquisition of a “right” to pursue the extraction. The “right” to extract gas from the Dragon gas field can only be given by the Venezuelan Government to the operator, be it Shell or NGC. To do so, terms and conditions must be agreed between the relevant parties covering many distinct aspects including, but not limited to, the tenor of the agreement, the pricing formulas to determine the value of the gas and the royalties to be paid, production sharing arrangements, applicable taxes amongst other things, all of which must conform with the governing law. This is not as simple as it may appear to the uninitiated.

Agreements must be negotiated between the operator and the Venezuelan Government. Since the field is in Venezuelan territorial waters, it will also require cross-border arrangements between the two governments. T&T and Venezuela must also agree on the various sovereign rights and obligations that will govern the cross-border movements of people, equipment and product and other arrangements between the host country and the operator. These agreements and permissions between the sovereign states of Venezuela and T&T must come before any of the other commercial agreements are undertaken.

None of these agreements now exist and will take time to be completed. Further, no extraction can begin before all arrangements are completed and the legal documents executed; between the governments, the governments and operators; the operators and all connected parties including the commercial market arrangements. Then there are financiers. The engineering and technical feasibility has probably been completed and various alternatives evaluated. As Prof Andrew Jupiter indicated on January 30, all administrations have been involved in these discussions/ negotiations which have been ongoing since 1985. There are many reasons why the negotiations have not been concluded.

T&T needs more gas. Installed plant capacity requires a reliable supply of 4.0 billion cubic feet a day (bcfd) if all the plants are to function at full capacity. The bid rounds have not yielded the desired results. Train 1 at Atlantic LNG remains closed because it has no gas supply. Available data suggest that national production in 2022 averaged 2.7 bcfd, well below capacity requirements. The 2023 budget presentation projected that production would be 2.9 bcfd this year. 50 per cent of the petrochemical plants were closed in 2018 when production averaged 3.6 bcfd, 33 per cent higher than 2022 production. Then market prices were depressed, and gas feedstock contracts were being negotiated at higher natural gas prices which were considered uneconomic.

The uncomfortable reality is that T&T needs more natural gas at prices that make sense. Absent the war in Ukraine and the high energy prices it has caused, T&T energy revenues would still be depressed, and the Government’s improved financial results in 2022 would not have occurred. Needing more gas and having a suitable option in the Dragon Field does not automatically make it either economically feasible or financially viable.

Future market conditions cannot be guaranteed. Market prices will fluctuate, as will input costs. Therefore, the negotiations must encompass pricing formulas which will determine future profitability. These negotiations are technical and difficult and take time to arrive at the point where both parties can agree. We are far away from this point.

The US prohibitions against payment in cash under its sanction’s rubric complicate the issue. Payment in kind raises logistical issues of transport, warehousing, insurance etc, quite apart from the complicated procurement mechanisms needed to support any barter arrangement, if it materialises. President Maduro’s comments call upon T&T to reject US colonialism thus raising another sticking point. For the record, whilst T&T has a waiver which should include the NGC, what is the position with the proposed operator, Shell? It would also need a separate waiver

There are still many geopolitical risks. US presidential elections are due in 2024 and a different president may not continue the waiver. For example, Trump repudiated the arrangements negotiated by a multilateral team on the Iran nuclear programme. Neither are we clear on the arrangements to facilitate an orderly transfer of power in Venezuela. T&T elections are due in 2025. Venezuela has a dicey record in dealing with foreign companies as it (PDVSA) is a defendant in many cases before the International Court for Arbitration in respect of seizures/nationalisation of foreign company assets.
The ball is again in the Energy Minister’s hands.

Shell Venezuelan assets were nationalized in 1976 and as the Dragon operator, LNG pioneer Shell is the main attraction and sole comfort for stakeholders. Shell has no need for intervention by the TT Team, out of its depth. The cash-strapped state should exit and divest all energy assets to focus on its priority of law and order, as intolerable levels of crime neutralize all benefits of the promised industrial resurrection.

 

Tell the truth on economic situation

DINESH RAMBALLY

ON JANUARY 27, the Minister of Finance posted on social media that, according to the CSO, the Trinidad and Tobago economy grew by a healthy 4.1 per cent in the first half of 2022. Did this have anything to do with economic policy or is it due to the reopening after the lockdown?

Similarly, the minister boasted that for the first time in 14 years, TT had a budget surplus. Was this due to some plan or was it by sheer coincidence?

To the uninitiated, this sounds absolutely fantastic. But in reality it is nothing more than a deflection from the real issues facing the economy. It is pointless to quote raw statistics without correlating them with other economic indicators to see the impact on the population. Without assessing the impact on the population the Government is not being truthful.

For example, try accessing US dollars from any of the official channels and you would see the difficulty. Ask the shrinking middle class how they are dealing with the skyrocketing cost of food and inflation in general, which the CSO also reported. Has the Government forgotten the unprecedented murder toll of 614 for 2022? Did the minister try to connect the dots between the low participation of the labour force and the murder rate?

According to the CSO, the unemployment rate for the third quarter of 2022 was 5.4 per cent. Inflation in November 2022 was at 5.6 per cent. According to the Central Bank, food inflation for September 2022 was 11.6 per cent and headline inflation was 6.2 per cent. Why doesn’t the Government quote these figures to the population?

The truth is that the standard of living has declined for the middle and lower classes of the economy. Inflation and unemployment have taken a significant toll on workers. Boasting of a balanced budget and economic growth when the standard of living is declining for the majority of the population and the murder rate is at an all-time high is nothing more than political hogwash.

Tell the already burdened population, including pensioners, how they will now have to provide for property tax, increased T&TEC and WASA rates, the already increased fuel price and proposed increased court costs for several services with an average of 520 per cent for e-filing and 1,153 per cent for paper filing. Does an economic growth rate of 4.1 per cent or a budget surplus mean anything to these people?

How is the Government, that got an unplanned budgetary surplus in 2022 due to the Ukraine war, plan to address the monies owed in VAT (value added tax) refunds, BIR (Board of Inland Revenue) refunds and contractors? Shouldn’t the Government be telling us about the statistics on these matters?

Shifting to the Dragon gas deal, there has been great fanfare by the Government in announcing the deal. However, there was no commensurate announcement by the Venezuelan government. For such a deal, would it not have been an even greater PR stunt for both TT and Venezuela to have a joint press conference?

A key clause in the US waiver is that Venezuela is not to receive any cash payments and the duration of the waiver is two years. Keep in mind the average timeline for monetisation of such gas fields is at minimum three years and a critical economic consideration is that the payback period for investors is more than two years.

Any one financier for such a project would obviously want to assess the impact of the US waiver on their ability to recover their investment and the level of profit from same. In other words, if the clause is too restrictive from a business perspective, then an investor would take the investment somewhere else where there is a greater probability of an acceptable rate of return. Capital goes where it is welcomed and where it can provide the highest rate of return.

Having received approval from the Biden administration, what is Venezuela’s demand for accessing the gas? A critical consideration for investors would be if they can take Venezuela’s policy as sacred. With the current state of Venezuela, should there be a dispute, how will arbitration be settled and how will it be enforced? These are all risks that must be carefully assessed. Rowley’s enthusiasm should be measured before all considerations are taken into account.

The population by now is wary of the mixed signals and falsehoods given by the Government. The Prime Minister himself stated that rough waters are ahead while the Minister of Finance was promising smooth sailing. Time for the truth to be told on the economic situation.

Dinesh Rambally is the MP for Chaguanas West

 

 

Eni, Repsol seek control to lift oil output

Fabiola Zerpa and Nicolle Yapur, February 15, 2023

(Bloomberg) – European oil companies are pressing Venezuelan President Nicolas Maduro for greater control of their operations in Venezuela, after U.S. driller Chevron Corp. renegotiated its contract last year.

Italy’s Eni SpA and Spain’s Repsol SA are reviewing drafts of contracts after holding a series of meetings with high-ranking members of government in which they asked for operational control at oil and gas ventures jointly held with SEC PDVSA.

Chevron received a similar deal, raising expectations from analysts that Venezuela would give other energy companies broader control over joint ventures. Eni, Repsol and French company Maurel et Prom have the capacity to pump an additional 50,000 to 80,000 bpd if they increase operations in the OPEC founder, according to Francisco Monaldi, lecturer in energy economics at Rice University’s Baker Institute for Public Policy.

While even an extra 80,0000 bpd would barely immediately impact global energy markets, the move would be the latest sign of an advancing political agenda in the petrostate. Maduro used the Chevron deal to call on the U.S. to ease more sanctions on the beleaguered oil industry.

It would also add to Venezuela’s efforts to increase oil production in an industry responsible for the vast majority of its exports. Current output of around 690,000 bpd is roughly one-third of what it was five years ago, according to OPEC, due to the hurdle of economic sanctions. Increasing oil output would shore up regional economies and boost wealth equality and tight global energy supplies.

If the European oil majors are granted more control from the Venezuelan government, it is not clear if the companies would need an additional permission from the U.S. Treasury to avoid secondary sanctions before increasing production.

Eni and Repsol began negotiations with Venezuelan officials, including Vice President Delcy Rodriguez, in mid-2022. Negotiations have gained momentum recently as the Venezuelan government requested that the companies make investments in gas projects in exchange for more control at oil fields.

Venezuelan oil and gas production declined since the U.S. impopsed sanctions in 2019. Eni and Repsol ventures have also decreased. Both companies hold a waiver from U.S. Treasury Department that lets them take oil shipments from PDVSA to offset 2022 sales from a natural gas project to supply the domestic market. In a recent move, they agreed to a swap deal to load 4 million barrels of Venezuelan oil through March to continue an agreement reached with Maduro to offset PDVSA debt.

In November, the U.S. Treasury eased restrictions on Chevron, allowing the IOC to produce and export Venezuelan oil. With more control over its operations, Chevron raised its oil production to 90,000 bpd from 50,000 bpd, helping it recoup part of the debt owed by PDVSA.

The initiative from the U.S. government came as President Joe Biden asked American oil companies to boost oil production in order to combat higher gasoline prices that burdened consumers.

Greenpeace exits Shell oil platform

February 14, 2023, by Nadja Skopljak

After 13 days of occupation and a journey of almost 4,000 kilometers from the Canary Islands, Greenpeace activists disembarked Shell’s oil platform at the port of Haugesund in Norway , with no arrests.

Four activists boarded the floating production storage and offloading (FPSO) unit from inflatable boats north of the Canary Islands in the Atlantic Ocean on 31 January as it was transported to Shell’s oil and gas project in the North Sea, with two more persons joining on 6 February at sea.

The Penguins FPSO unit is destined for a redevelopment project at the Penguins field, which, Greenpeace claims would create 45 million tonnes of CO2 if all of the oil and gas is burnt, more than the entire annual emissions of Norway.

Five fellow activists on board Greenpeace Nordic’s Tanker Tracker boat confronted the 51-000-tonne White Marlin vessel contracted by Shell as it approached the port. When the platform docked, protestors descended the boom and disembarked . in Haugesund, ending the longest-ever Greenpeace. occupation of a moving oil platform.

Yeb Saño, Greenpeace Southeast Asia Executive Director. threatened, “Shell might think this is the end of our protest, but my message to chief executive Wael Sawan is that this is just the beginning. Negotiations around climate loss and damage have so far stalled when it comes to the fundamental question of: who will pay?

Not only can the likes of Shell afford to pay; it is right that they must pay for devastation that they are directly causing. Shell, and the wider fossil fuel industry, must stop drilling, and start paying. One way or another we will make polluters pay.”

During the protest, Greenpeace and the activists received a legal claim for over $120,000,for alleged caused damage and were accused of having “unlawfully” erected solar panels and a wind turbine on the oil platform and of “intimidation” for urging Shell to stop drilling and start paying for climate loss and damage.

The claim demanded that the campaign group pay for increased security costs associated with the protest and for other damage that might have occurred. According to Greenpeace, with no assessment having yet taken place, the claim failed to explain exactly what the sum of over $120,000 is for, or what damage is alleged.

Shell made a final investment decision for redevelopment of the Penguins oil and gas field in 2018, authorizing construction of the Penguins FPSO, reported to be the first new manned installation for Shell in the northern North Sea in almost 30 years.

PRC Offshore Oil Engineering Company (COOEC) completed e construction of the FPSO at the end of November 2022. The FPSO left the Chinese yard on board Boskalis’ White Marlin vessel to embark on its journey to Norway. While it was estimated that the journey to the North Sea would take 55 days, the vessel was expected to stop at a Norwegian yard for commissioning prior to reaching its destination in the UK North Sea.

The FPSO is 118 meters tall and weighs 32,000 tonnes, and has the ability to withstand harsh sea conditions. It can process 12.75 million barrels of crude oil and 1.24 billion m3 of natural gas per year. It has a maximum crude storage capacity of 400,000 barrels.

 

 

bp fourth quarter and full year 2022 results

07 Feb 2023

bp has announced its fourth quarter and full year 2022 results

• • Net debt reduced to $21.4bn; 2022 ROACE 30.5%
  • 10% increase in resilient dividend to 6.61 cents per ordinary share; further $2.75bn share buyback announced
  • Delivering resilient hydrocarbons – Cassia C start-up; first LNG cargo loaded at Coral Sul FLNG; 20-year extension to Tangguh PSC*
  • Continued progress in transformation to an IEC – accelerating biogas strategy with completion of Archaea Energy acquisition; >65% increase in EV charge points in 2022

Highlights

Underlying replacement cost profit* $4.8 billion

• Underlying replacement cost profit for the quarter was $4.8 billion, compared with $8.2 billion for the previous quarter. Compared to the third quarter, the result was impacted by a below average gas marketing and trading result after the exceptional result in the third quarter, lower oil and gas realizations, a higher level of refinery turnaround and maintenance activity, and lower marketing margins and seasonally lower volumes. An underlying ETR* of 40% in the fourth quarter brings the full year underlying ETR* to 34%.
• Reported profit for the quarter was $10.8 billion, compared with a loss of $2.2 billion for the third quarter 2022. The reported result for the fourth quarter is adjusted by inventory holding losses net of tax of $1.1 billion and a gain for adjusting items* net of tax of $7.1 billion to derive the underlying replacement cost profit. Adjusting items include favourable fair value accounting effects* of $13.2 billion before tax, primarily due to a decrease in forward gas prices compared to the end of the third quarter.

Net debt* reduced to $21.4 billion; further $2.75 billion share buyback announced

• Operating cash flow* in the quarter was $13.6 billion including a working capital release (after adjusting for inventory holding losses*, fair value accounting effects and other adjusting items) of $4.2 billion (see page 31).
• Capital expenditure* in the fourth quarter and full year was $7.4 billion and $16.3 billion respectively. Within this, inorganic spend was $3.5 billion in the fourth quarter and full year, including $3.0 billion for Archaea Energy, net of adjustments, and $0.5 billion for the earlier than expected completion of the acquisition of EDF Energy Services.
• During the fourth quarter, bp completed share buybacks of $3.2 billion. The $2.5 billion share buyback programme announced with the third quarter results was completed on 3 February 2023.
• In the fourth quarter, bp generated surplus cash flow* of $5.1 billion and intends to execute a $2.75 billion share buyback from surplus cash flow prior to announcing its first-quarter-2023 results. bp has now announced share buybacks from surplus cash flow equivalent to 60% of cumulative surplus cash flow since the start of 2021.
• Net debt fell for the eleventh successive quarter to reach $21.4 billion at the end of the fourth quarter.

Growing distributions; updating disciplined financial frame

• A resilient dividend remains bp’s first priority within its disciplined financial frame. It is underpinned by a cash balance point* of $40 per barrel Brent, $11 per barrel RMM and $3 per mmBtu Henry Hub (all 2021 real).
• For the fourth quarter, bp has announced a dividend per ordinary share of 6.610 cents an increase of around 10%. This increase is underpinned by strong underlying performance and supported by the confidence we have in delivering higher adjusted EBITDA* as a result of our updated investment plans.
• bp is committed to maintaining a strong investment grade credit rating, targeting further progress within an ‘A’ grade credit rating. For 2023 bp intends to allocate 40% of surplus cash flow to further strengthening the balance sheet.
• bp continues to focus on disciplined investment allocation. For 2023 bp expects capital expenditure of $16-18 billion and for 2024-30 now expects capital expenditure in a range of $14-18 billion including inorganic capital expenditure*.
• For 2023 and subject to maintaining a strong investment grade credit rating, bp remains committed to using 60% of surplus cash flow for share buybacks.
• Based on bp’s current forecasts, at around $60 per barrel Brent and subject to the board’s discretion each quarter, bp expects to be able to deliver share buybacks of around $4.0 billion per annum, at the lower end of its capital expenditure range, and have capacity for an annual increase in the dividend per ordinary share of around 4%.

Continued progress in transformation to an Integrated Energy Company

• In a separate announcement, bp has today provided an update on the significant progress made in executing its transformation to an Integrated Energy Company (IEC) since outlining its new strategy.
• In resilient hydrocarbons bp has accelerated its biogas strategy – part of its bioenergy Transition Growth Engine – completing the acquisition of Archaea Energy a leading US biogas company. Delivering on its focus on cost and efficiency, in 2022 bp delivered its lowest upstream unit production cost* since 2006 and highest upstream plant reliability* on record.
• In convenience and mobility bp continues to make strategic progress, announcing an exclusive agreement in the UK with Marks and Spencer (M&S) to install fast(a) charge points to around 70 of their stores, adding up to 900 charge points within the next two years; and increasing the number of EV charge points by over 65% versus 2021.
• In low carbon energy bp has continued to make rapid progress building its portfolio of green hydrogen* projects, signing memoranda of understanding (MoUs) with both Mauritania and Egypt to explore the potential for large scale green hydrogen developments.

Bernard Looney, chief executive officer, said:

‘Throughout 2022, bp continued to focus on delivery of our Integrated Energy Company strategy. We are helping provide the energy the world needs today and – at the same time – investing with discipline into our transition and the energy transition – as demonstrated by the Archaea Energy acquisition.

We are strengthening bp, with our strongest upstream plant reliability on record and our lowest production costs in 16 years, helping to generate strong returns and reducing debt for the 11th quarter in a row. Importantly, we are delivering for our shareholders – with buybacks and a growing dividend.

This is exactly what we said we would do and will continue to do – performing while transforming.’

Source: BP

 

bp Integrated Energy Company strategy update

07 Feb 2023

bp has announced an Integrated Energy Company strategy update: Growing investment, growing value, growing distributions

Performing while transforming:

• Performing: 2022 EBITDA $60.7 billion; full year operating cash flow $40.9 billion; net debt $21.4 billion, lowest for almost a decade; ROACE 30.5%; full year tax $15.1 billion; strongest upstream plant reliability on record; lowest production costs in 16 years
• Transforming: investment in transition growth engines c. 30% of 2022 total investment, up from c. 3% in 2019

Leaning further into bp’s strategy:

• Investing more in the energy transition and bp’s transition, investing more in supporting energy security and energy affordability today
• Up to $8 billion more into transition growth engines by 2030 – growing in higher-return bioenergy, and convenience & EV charging; focusing hydrogen and renewables & power where bp can leverage integration
• Up to $8 billion more into oil and gas by 2030 – targeting short-cycle fast-payback opportunities with lower additional operational emissions
• Aim to materially increase earnings through 2030 – aiming for $51-56 billion group EBITDA in 2030

Delivering for shareholders:

• Growing dividends: 10% increase in dividend per ordinary share for fourth quarter, representing 21% growth from 4Q 2021.
• Growing buybacks: further $2.75 billion buybacks announced today; total of $11.25 billion buybacks announced from 2022 surplus cash flow
• Increasing targets: over 12% annual EBIDA per share growth to 2025; over 18% ROACE in 2025 and 2030

Since introducing its new purpose, net zero ambition, organisation and strategy in 2020, bp has built strong momentum across its strategy and delivered value for shareholders. The major global uncertainties experienced in the past three years – from the pandemic and its aftermath to the impact of Russia’s attack on Ukraine – have increased the world’s focus on energy security and affordability as well as accelerated the drive towards a lower carbon energy system.

bp chief executive Bernard Looney said:

‘It’s clearer than ever after the past three years that the world wants and needs energy that is secure and affordable as well as lower carbon – all three together, what’s known as the energy trilemma. To tackle that, action is needed to accelerate the transition. And – at the same time – action is needed to make sure that the transition is orderly, so that affordable energy keeps flowing where it’s needed today.

‘As an integrated energy company, bp is very deliberately set up to help on both counts. With three years of delivery and track record – we have increased confidence our strategy is working. And with today’s announcement we are leaning further in. We are growing our investment into our transition and, at the same time, growing investment into today’s energy system. In doing so – we see tremendous opportunity to create value. And it’s what governments and customers are asking of companies like us.’

bp now aims to accelerate the growth in earnings from its transition growth engines (TGEs) while also delivering higher earnings than previously expected from its oil and gas businesses through 2030 – both compared to bp’s previous aims(1).

bp plans to support this growth by disciplined increases in investment over the period to 2030 of up to $8 billion in the TGEs and up to $8 billion in oil and gas. bp is adjusting its target capital expenditure range to $14-18 billion a year out to 2030(2), from the previous range of $14-16 billion. All investments will remain subject to disciplined application of bp’s balanced investment and returns criteria.

bp expects this additional incremental investment to deliver around $3 billion additional group EBITDA in 2025 and is aiming for that to grow to $5-6 billion in 2030. This would comprise an additional $2 billion from the TGEs and $3-4 billon from oil and gas projects in 2030. bp has also raised its oil and gas price and refining margin assumptions(3).

As a result of both factors, bp is now targeting group EBITDA of $46-49 billion in 2025 and is aiming for $51-56 billion in 2030, in a $70/barrel (2021 real) oil price environment. These compare to its previous target and aim, from May 2022, of around $38 billion in 2025 and $39-46 billion in 2030 at $60/barrel (2020 real).

Source: bp

 

 

PRC spy balloon could collect intelligence signals

By MATTHEW LEE and ERIC TUCKER, Nomaan Merchant and Lolita C. Baldor in Washington

9 February

WASHINGTON (AP) Citing imagery from American U-2 spy planes. the administration declared the PRC balloon shot down by the U.S. was equipped to detect and collect intelligence signals as part of a massive, military-linked aerial surveillance program that targeted more than 40 countries.

A fleet of balloons operates under the direction of the People’s Liberation Army and is used specifically for spying, outfitted with high-tech equipment designed to gather sensitive information from targets across the globe. Similar balloons have sailed over five continents, according to the US administration.

A senior State Department official offered the most detail to date linking PRC military PLA to the balloon that was shot down by the U.S. last weekend over the Atlantic Ocean. Public details outlining the program’s scope and capabilities were meant to refute PRC’s persistent denials that the balloon was used for spying, including a claim that U.S. accusations about the balloon amount to “information warfare.”

President Joe Biden defended the U.S. action. Asked by Spanish language Telemundo Noticias whether the balloon episode represented a major security breach, he said no.

“Look, the total amount of intelligence gathering that’s going on by every country around the world is overwhelming. Anyway, it’s not a major breach. .. it’s a violation of international law. It’s our airspace. And once it comes into our space, we can do what we want with it.”

On Capitol Hill, the House voted unanimously to condemn PRC for a “brazen violation” of U.S. sovereignty and efforts to “deceive the international community through false claims about its intelligence collection campaigns.” Republicans criticized Biden for not acting sooner to down the balloon but both parties united on the vote, 419-0. In Beijing, before the U.S. offered its new information, PRC Foreign Ministry spokesperson Mao Ning repeated the hegemon’s insistence that the large unmanned balloon was a civilian meteorological airship that had blown off course and that the U.S. had “overreacted” by shooting it down.

“It is irresponsible,” Mao said. The latest accusations “may be part of the U.S. side’s information warfare against China.”

Underscoring the tensions, PRC defence minister refused to take a phone call from Defense Secretary Lloyd Austin to discuss the balloon issue , the Pentagon said. Secretary of State Antony Blinken cancelled a planned weekend trip to Beijing.

The U.S. flatly contradicted PRC version of events, saying that imagery of the balloon collected by American U-2 spy planes as it crossed the country showed that it was “capable of conducting signals intelligence collection” with multiple antennas and other equipment designed to upload sensitive information and solar panels to power them.

Jedidiah Royal, the U.S. assistant defense secretary for the Indo-Pacific, told a Senate Appropriations subcommittee that the military has “some very good guesses” about what intelligence PRC was seeking. More information was expected to be provided in a classified setting.

Senior FBI officials who briefed reporters on the condition of anonymity under ground rules set by the bureau said just a few pieces of the balloon had arrived at the FBI’s Quantico, Virginia, lab for investigation.

So far, investigators have parts of the balloon canopy, wiring, and what an official called “a very small amount of electronics.” The official said it was “very early for us to assess what the intent was and how the device was operating.”

According to two U.S. officials, the balloon recovery efforts were temporarily suspended due to high seas. They said some balloon debris was intact on the ocean floor and divers had recovered potentially high-value equipment . Another official said that some of the recovered equipment components had English writing or markings on them but it wasn’t clear if they were American parts or from another English speaking country. The more highly technical parts recovered did not have any overt markings.

Much of the debris is concentrated in two separate sections of an area 15 football fields long and 15 fields across, according to the officials who spoke on condition of anonymity because of the sensitivity of the collection process.

The State Department official, providing details to reporters by email, also on condition of anonymity, said an analysis of the balloon debris was “inconsistent” with PRC explanation that it was a weather balloon that went off course. The U.S. is reaching out to countries that have also been targeted.

The U.S. has confidence that the manufacturer of the balloon shot down has “a direct relationship with PRC military and is an approved vendor of the” army, the official said, citing an official PLA procurement portal as evidence.

State Department spokesman Ned Price would not identify the other countries the U.S. says have also been targeted. Nor would he reveal how the U.S. knows there have been PRC incursions over those countries’ territory, saying to do so could compromise intelligence sources and methods.

The release of new information appeared part of a coordinated administration response, with multiple officials appearing before congressional committees to answer questions about the balloon.

Testifying before the Senate Foreign Relations Committee, Deputy Secretary of State Wendy Sherman said officials had taken “all necessary steps to protect sensitive information” and had been able to study and scrutinize the balloon and its equipment.

“We will continue to answer the dangers posed by the PRC with determination and resolve,We will make clear to the PRC that violations of our sovereignty and the sovereignty of other countries are unacceptable.”

At a separate Senate subcommittee hearing, lawmakers pressed administration officials, including Pentagon military leaders, about why the balloon was not shot down over sparsely populated areas of Alaska. They questioned whether allowing the balloon to transit such a large area set a precedent for future spying efforts by PRC and others.

“It defies belief that there was not a single opportunity to safely shoot this spy balloon prior to the coast of South Carolina,” said Sen. Susan Collins, R-Maine. “By the administration’s logic we would allow the Chinese to fly surveillance balloons over the Pentagon or other sensitive sites and populated areas.”

Melissa Dalton, assistant defense secretary of Homeland Defense, and Lt. Gen. Doug Sims, director of operations for the Joint Chiefs of Staff, said the U.S. wanted to avoid any injuries or deaths from the debris field if the balloon was shot down over Alaska.

They added that shooting it down over the frigid, icy waters in that region would have made it more difficult and dangerous to recover the pieces for more analysis.

“We thought before we shot,” said Sims.This is not the first time the U.S. government has publicly called out alleged activities of the People’s Liberation Army. In a first-of-its-kind prosecution in 2014, the Obama administration Justice Department indicted five accused PLA hackers of breaking into the computer networks of major American corporations in an effort to steal trade secrets.

State Department today offered the first proof that the Chinese spy balloon was on an espionage mission, USA TODAY’s Tom Vanden Brook, Josh Meyer and Kevin Johnson report.

🎈 Inside the balloon, about the size of a regional jetliner, investigators found “multiple antennas to include an array likely capable of collecting and geo-locating communications.”