Dragon decision
Mariano Browne
2023, 10/22
The Finance Minister confirmed continued dependence on the energy sector in the 2024 Budget speech, translated into news about the progress with the Loran-Manatee and the Dragon Gas fields., important as they are easily accessible,. The Loran-Manatee cross-border field, straddles the T&T/Venezuela boundary with approximately 25 per cent in T&T waters. The Dragon Field across the border lies in Venezuelan waters.
Development of both fields requires Venezuelan consent because the Loran-Manatee field is a shared resource and Dragon belongs to Venezuela. Negotiating the commercial and legal arrangements is difficult.
Additional complications. overshadow the Dragon field, ensnared by geopolitical tension and the impact of sanctions administered by the US Treasury Department Office of Foreign Assets Control (OFAC). The amended licence from OFAC for T&T of two years and 13 days from October 18, 2023 to October 31, 2025, has new terms more acceptable to Venezuela than those in January 2023.
The licence “… permits the GORTT to negotiate with the Government of Venezuela and PDVSA to obtain exploration and production licences to extract natural gas, to operate the Dragon field and to make various payments associated with such a project including taxes, royalties, fees and lease bonus payments.” It gave the right to pay in US dollars or Bolivars. The licence is specific to the “…
GORTT, the National Gas Company of T&T, Shell plc and their subsidiaries, affiliates and contractors to pursue inter alia, the planning, financing development and execution and management of the Dragon Gas Field.”
Procedures are required to pursue a project Venezuela has not awarded rights to develop the field and has not negotiated legal, technical, and commercial arrangements with an operator.
Without an agreement between a commercial operator and Venezuela, there is no project and it is highly unlikely that the counterparty arrangements between Shell and NGC have been negotiated or completed. Cooperation agreements signed with Venezuela in this field are memorandums of understanding.
Aligning the commercial agreements is complex and minor errors can have large financial implications. The real work to turn these “agreements” into a viable project to bring benefit to T&T cannot be achieved in the two-year time frame.
The only decision that can be made now is to continue negotiating with Venezuela and do the due diligence required to convert Dragon field into a project. The field may be easily accessible due to proximity to an existing platform making it technically viable but this does not guarantee financial or economic success. Wider political risks cannot be overlooked in the anxiety to find more gas sources. They must be evaluated. and cannot be mitigated as Venezuela has cases before international courts regarding energy deals that have gone sour.
Geopolitical risk in the form of US sanctions is the boundary limitation on executing this project. That the GORTT must obtain a licence from the US Government to negotiate with and pay another country, is a hugely restrictive feature of the arrangement.
The tight, two-year window adds a further complication. If the technical negotiations can be completed in two years, what happens after? Another licence? First gas from Loran-Manatee is estimated to come ashore in 2028, 5 years after the final negotiation.
This project time frame indicates that the two-year time frame allowed by the OFAC licence is too short. No company will commit significant resources to a project where its ability to trade is so dependent on geopolitical events beyond its control
T&T may need and want the gas from the Dragon field, but the ability to successfully develop this field depends more on US foreign policy and its disposition towards T&T than on any technical consideration. That dependency has different costs and political implications.
Recent events at Caricom-Canada where the TT leader begged for aid for Haiti and at UNGA where he sought aid to fight crime proves that TT lacks the intellectual talent to implement Dragon development.
Stuart Young began his career as a barrister, became an MP in 2015. and served in Legal Affairs, Communications and Security. As Minister of Energy and Energy Industries since 19 April 2021 following closure of the SOC Petrotrin and decline of the local gas industry his limited experience included overseas visits to petroleum companies in USA and Europe.
Shell which was nationalised in Venezuela knows the OPEC founder only too well and is the key for implementation of Dragon development. This will be stymied by security in Trinidad as homicides approach 500 amid strikes, illegal migration, drug and arms trafficking, corruption in public services, sectarian strife, larceny, street crime, banditry, cancel culture and violations of human rights driven by racial envy of the British Indian rural, business and professional community.
Dragon in Caracas
2023, 10/27
Energy Minister Stuart Young will return to Venezuela to complete finalisation of the term sheet for the Dragon gas field devel;opment with Venezuela. After the US agreed T&T can make direct commercial arrangements with Venezuela to get its gas and pay for it according to the term sheet, minor adjustments like humanitarian concerns remain.. “But the bottom line is the door is open for commercial arrangements.”
Young is currently on a week’s vacation. “As soon as he gets back here he’ll be on his way to Caracas to complete the dotting of the Is and crossing the Ts on the term sheet and in the meantime Shell, our operating partner, will be moving full speed ahead on the technical side of thing,”
Not everything could be divulged, “because these commercial arrangements are subject to certain confidentialities. Very soon we expect to close off that negotiation and the last thing to happen is for the licence to operate… when all parties are satisfied with conditions, the licence to operate will be issued,”
T&T got a commitment from Venezuelan President Nicolas Maduro that the licence would be issued. Rowley could not say when first gas will be obtained from the field until the licence is received. The platform for the field already exists. The venture was for the long term since if TT didn’t discover major fields to replace what is being consumed daily and didn’t get access to where the gas exists, it would be forced to accept a “significant reduction of fortunes”. TT is now down to 2.6Billion Cubic Feet of gas a day
U.S.suspends sanctions on Venezuela
Eric Martin, Fabiola Zerpa and Patricia Laya, Bloomberg October 19, 2023
The U.S. suspended sanctions on Venezuelan oil, gas and gold production after four years and lifted some restrictions on bond trading, signalling confidence that strongman President Nicolas Maduro is ready to confront all challengers in an open election. In a gesture of goodwill after Maduro’s regime entered talks with some members of the opposition, the U.S. Treasury Department said it issued a six-month licence authorizing transactions involving the oil and gas sector in Venezuela, authorized dealings with state-owned gold mining company Minerven and lifted a ban on secondary trading of some Venezuelan sovereign bonds and debt and equity issued by the SOC Petroleos de Venezuela SA.
The U.S took a calculated gamble. that Maduro, a long-time vocal critic of U.S. policy who brutally repressed protests against his 10-year rule, is ready to change his ways after US sanctions further crippled the Venezuelan economy, hastening the exodus of 7 millions citizens.. Maduro said on state TV,
“We’re in the presence of a new era for Venezuela,. We are ready for a new era with the U.S., of respect, equality and advancement.”
The measures are a nod to the political agreement signed by the Maduro government with a faction of the opposition in Barbados on Tuesday.
The US Treasury said they are “consistent with U.S. sanctions policy, in response to these democratic developments. The U.S. is prepared to amend or revoke authorizations at any time, should representatives of Maduro fail to follow through on their commitments, All other restrictions imposed by the U.S. on Venezuela remain in place.”
Following the issuing of the licences, Maduro released five political prisoners, including former lawmaker Juan Requesens and journalist Roland Carreño, according to a list published by the head of the opposition delegation, Gerardo Blyde. As part of the agreement, the U.S. expects Venezuela to restore by November the political rights of all candidates banned from participating in next year’s presidential elections . That includes Maria Corina Machado, considered the frontrunner ahead of Sunday’s primaries. Still, Machado’s candidacy is no sure thing — she is banned from holding office because of allegations she sought to undermine the regime. If she’s not allowed to run, the U.S. will be in the awkward position of having to decide whether to impose sanctions again.
Maduro said he would “not endorse irregularities” in negotiations with the opposition and made veiled references that Machado would not be able to participate.
Venezuela’s oil exports to the U.S. were halted in early 2019 when the Treasury imposed sanctions on PDVSA. Venezuela exported nearly 365,000 bpd from its ports to the U.S., twice as much as in September.
Michael Penfold, a professor at the Institute of Advanced Studies in Administration in Caracas, said,
“This will have broad positive economic consequences for Venezuela because they imply the return of Venezuela to the oil market, even if gradually. The expectation was that they were going to issue special licences, and we are seeing a very broad licence in response.”
Today’s measures should result in an immediate increase of crude oil exports from Venezuela to the U.S., and of U.S. petroleum products to Venezuela, said Fernando Ferreira, director of geopolitical risk at Rapidan Energy Advisors.
“We have also seen quite a bit of interest from oil companies in Venezuela, so I wouldn’t be surprised to see an increase in activity and production in the coming months.”
Vice President Delcy Rodríguez said the licence allows Venezuela’s Central Bank and another state bank to conduct and receive oil-related payments.
Trading : The ban on trading of Venezuelan debt came into effect in 2019, under former President Donald Trump’s administration. The two licences removing a ban on the secondary trading of Venezuelan sovereign and PDVSA bonds will allow individuals and institutions based in the US to buy the country’s government and oil bonds on the secondary market. They had been limited to only selling the securities. Earlier on Wednesday, defaulted government and SOC bonds were trading higher following the announcement of the deal struck between the government and the opposition . PDVSA notes maturing in 2026 rose to levels not seen since June 2022.
Hostility from Venezuela
Oct 01, 2023 Sir Ronald Sanders
(The writer is Antigua and Barbuda’s Ambassador to the United States and the Organization of American States. He is also a Senior Fellow at the Institute of Commonwealth Studies at the University of London and Massey College in the University of Toronto. The views expressed are entirely his own.)
Waterfalls Magazine – Intimidatory and aggressive statements issued from Venezuela in the name of President Nicolas Maduro, the Government of Venezuela and the National Assembly concerning Guyana, raised alarms in the regional, hemispheric and international community.
The Commonwealth, the Organization of American States, and CARICOM objected to Venezuela’s behaviour toward Guyana, particularly as the Venezuelan President Nicolás Maduro alleges, without any substantiation, that the Guyana Government is allowing the United States of America (US) to construct a military base on its territory “against Bolivar’s Venezuela”.
In a UN statement, the Guyana Government rejected Venezuela’s allegation, stating that “this all derives from Venezuela’s grotesque claim to two-thirds of Guyana”.
Historical Context- In 1899, Venezuela agreed to an international arbitration that established the boundaries between Guyana and Venezuela as a ‘full, final, and perfect’ settlement. However, in 1962,as Guyana was on the brink of gaining independence, Venezuela reversed its longstanding acceptance of the 1899 settlement. Without providing evidence, the regime claimed that the settlement was no more than a covert political agreement that infringed on its rights.
Based on this allegation, Venezuela staked a claim to two-thirds of Guyana, specifically the Essequibo region. This claim, together with intermittent acts of belligerence by Venezuela including its naval forces, cast a shadow over Guyana’s economic development for 57 years of its independence, deterring investors and causing instability in the Commonwealth country.
In February 1966, three months before Guyana’s independence from Britain, representatives from Venezuela, Britain, and Guyana convened in Geneva and signed an agreement endorsed by their governments and parliaments, aiming to resolve ‘the controversy’. This agreement outlined several steps towards resolution, including a provision for the UN Secretary-General to select a means of resolution as specified in Article 33 of the UN Charter. This process is articulated in Article IV of the 1966 Geneva Agreement which Venezuela fully endorsed. Therefore, after the failure of initial resolution steps, UN Secretary-General António Guterres decided on 30 January 2018 that the International Court of Justice (ICJ) would be the avenue for resolution.
The path of peaceful resolution In March 2018, Guyana applied to the ICJ for judicial adjudication. Venezuela refused to recognize the ICJ’s jurisdiction, abide by its decisions, or participate in its proceedings.
This response was a direct infringement of Article 93 of the UN Charter, which clearly states: “All Members of the United Nations are ipso facto parties to the Statute of the International Court of Justice”.
However, the ICJ adjudged that it had jurisdiction to hear the case. Venezuela appeared twice before the Court to object. On both occasions, the Court rejected the Venezuelan objections. Therefore, the case has continued much to the disquiet of Venezuela which has clearly always been fearful of the Court’s decision.
The hostile path- In 2020, Guyana started producing and selling offshore hydrocarbons, boosting its economy. The IMF declared Guyana to be the fastest growing economy in the world with GDP growth of 62.3% in 2022 and 59% in the first half of 2023. These spectacular riches sparked an immediate response from Venezuela when, on 13 September 2023, Guyana President, Irfaan Ali, updated the public on bids for 14 new offshore oil blocks opened for exploration and development. Ali said that immediate bids on 8 blocks had been received from oil majors such as ExxonMobil, Hess Corporation, China National Offshore Oil Corporation and Total.
On 19 September 2023, Venezuela described the bidding process as “illegal” and issued a “warning” to the participating companies that it would “apply all necessary measures to prevent the illegitimate exploitation of the natural resources that belong to our nation”.
This was followed by the unsubstantiated allegation on 23 September 2023 at the UN General Assembly that the US is seeking “to establish a military base in the contested territory, with the aim of creating a spearhead in its aggression against Venezuela and consolidating the plunder of our energy resources”.
Attempt to divide CARICOM: In an open message on X , Maduro proposed that Guyana should abandon the process at the ICJ for “a meeting promoted by CARICOM to retake the Geneva Agreement of 1966”. It is a misleading proposition because it is clear, from even a cursory reading of the Geneva Agreement, that Guyana has followed its terms to the letter.
Maduro had previously sought, unsuccessfully, to divert CARICOM from supporting the ICJ process. He has not succeeded in this further attempt. Although many CARICOM governments are friendly with Venezuela , benefiting from cheap Petrocaribe oil and urged the US to end sanctions , on 22 September 2023, CARICOM publicly supported Guyana’s sovereignty and right to develop its resources.
Promoting Nationalist Venezuela sentiment: On 21 September 2023, Venezuela’s National Assembly, decided to arouse nationalist sentiment at the urging of the regime.. It decided to hold a referendum on the claim to Essequibo “so that the people strengthen the defence” and “the inalienable rights of Venezuela”. It is a referendum hardly worth holding since, in furtherance of their unsubstantiated claim, for 61 years successive Venezuelan governments have indoctrinated their people from primary school in the belief that Essequibo belongs to Venezuela.
When Venezuelan political parties met in Mexico in August 2021 in another failed attempt to find a way out of the political, economic and humanitarian challenging the country , the only thing on which they agreed was the claim for the Essequibo.
International Involvement and Response: The international community made its position clear: it favours ICJ adjudication as the appropriate and peaceful means to settle the controversy, adhering to the Charter of the UN and international law. This resolution path not only serves justice but also underpins the stability and development prospects of both Guyana and Venezuela, fostering an environment where mutual respect and cooperation can flourish.
ALNG
2023, 10/27
Prime Minister Dr Keith Rowley told media that signing the agreements in December to restructure the shareholding in Atlantic LNG was one of the most significant decisions of the Government.
Restructuring of the shareholding in the four-train LNG company in Point Fortin in addition to the new and improved formula for realising net back LNG revenues “is saving us. Without those two decisions, the future would have been quite bleak. If I have done nothing else to take us to this position, I am satisfied that my living has not been in vain.”
The globe-trotter outlined his busy odyssey between mid-November and December 7, which begins in the Arab Kingdom of Saudi Arabia with the Caricom/Saudi Arabia summit on November 16, after which the fund-chaser will hold bilateral negotiations with the OPEC founder. Its massive fund for major global investments is attractive to Caricom, addicted to foreign direct investment .
Saudi Arabia possesses 17 per cent of the world’s proven petroleum reserves.
Proven crude oil reserves (million barrels) 267,192
Proven natural gas reserves (billion cu. m.) 8,507
Crude oil production *(1,000 b/d) 9,125
Marketed production of natural gas (million cu. m.) 120,485
The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental , created in 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
After several days in the world’s largest sand desert, the political airfarer then proceeds to the United Nations Climate Change Summit, COP 28, in Dubai, from November 30 and December 12. and will be at the high level discussion for three days.
The high-flying Tobagonian will then visit London from December 4 to 6 to sign documents that will formalise the restructuring of Atlantic LNG negotiations with IEC, BP and Shell, over the last two-and-half years.
“The restructuring of Atlantic LNG is one of the most significant things this Government would have done. It was not easy, but I think we were able to convince the principals that Trinidad and Tobago’s interest has to come first.”
Work done on Train 1 changed the shareholding of the LNG business. He lamented that people did not pay enough attention to those far reaching. decisions,
“Without the restructuring of Atlantic LNG, our earning capacity would have been significantly hampered. When all four LNG trains were in operation, the Government’ shareholding in Train I was 10 per cent and 11.11 per cent in Train IV. T&T had no shareholding in Trains II and III. The two largest upstream natural gas producers , BP and Shell, have shareholdings in all four trains, since they were the investors. When there was insufficient gas to run four trains., other owners of Train I decided it had to be withdrawn, a logical business decision.
“But, of course, if you were not running four trains and they had all of the shareholding in Trains II and III, you know what that meant for us.. .What we did was to ensure that we kept Train I on the table, with a massive loss of public funds so that we would have a seat at the table and negotiate. As a result, we were able to change the shareholding in the restructured LNG business in Trinidad and Tobago, where the Government of T&T will now have a shareholding of 10 per cent in the entire business…”
The government could earn revenue from taxation without ownership. Instead, this part-nationalization followed the significant loss of $240 million of state assets in a bitter debacle that led to a purge of the NGC board, whose former chair, Energy Minister for 3 years, is now High Commissioner in Guyana.
More forex
2023, 10/04
At its post-budget discussion, President of the T&T Chamber of Industry and Commerce, Kiran Maharaj says more foreign exchange must be generated, and sectors properly activated with the potential to support citizens.
“We also need to support our sectors to be more locally conscious, especially our food and digital sectors,” she said, at the event, “Creating a sustainable economy: The next big play for T&T.”
She reiterated the call for Government to deal with the current crime scourge which continues to negatively impact businesses.
“If we do not bring this under control how can we feel comfortable to continuously invest in our country? How can we feel safe and happy? The T&T Chamber has began its journey to find solutions we can offer to the national community and we have indicated our desire to work with Government in other areas.”
Crime is everybody’s problem and there is need to continue to work collectively to solve this problem.
On the wider business sector she advised a sense of urgency within the context of efficiency.
“I was surprised about the number of incentives that are available to local businesses, but which come to nought owing to the lack of proper process and implementation. Why can we not do what we say, so we can get the job done? If you have problems and get stuck in the system, then, as your Chamber, we want to know. We must start documenting such roadblocks and ask for them to be resolved. We can only do so with your feedback. “
She noted that the introduction of the chamber’s three new committees: food security, agriculture and fisheries; pharmaceutical and wellness and the Orange economy were necessary additions as the organisation saw the need to support the development of these economic sectors.
NGC & Methanex launch training platform
The National Gas Company of TT Ltd (NGC) and Methanex partnered to sponsor Sustain-U, a sustainability and environment, social, and governance (ESG) training platform developed by Caribbean Ideas Academy. NGC said Sustain-U will assist organisations and their employees build a strong sustainability understanding, learn how to quantify impact and take tangible action.
“It is designed to help accelerate the Caribbean region’s pursuit of the UN sustainable development goals with content that addresses learning around these issues that currently act as challenges to regional sustainability. These include increased risk of climate-related disasters – despite our low contribution to greenhouse gas emissions – social issues including crime and poverty, and a pressing need to future proof our institutions to compete more effectively.”
The first wave of Sustain-U training programmes is expected to “go live” by early 2024. The programmes will feature experienced practitioners providing intuitive and actionable sustainability insights, using a blend of their practical expertise and understanding of our unique Caribbean context.
“We developed Sustain-U because our people are our region’s most important resource. We believe that a learning platform that helps organisations and their employees transition to sustainable practices can accelerate the region overall,” Caribbean Ideas Academy CEO Chike Farrell said.
Small island developing states need innovative solutions to achieve sustainable development in order to advance economic growth, improve welfare and preserve the environment for future generations.
NGC president Mark Loquan underscored the importance of education for NGC.
“NGC has made education a cornerstone of our green agenda – our portfolio of clean energy and sustainability initiatives – because we understand the nexus between awareness and action. Any initiative that allows us to effectively teach our citizens about climate change, about the energy transition, about sustainable living and development, is an initiative worth backing.”
Methanex managing director Colin Bain said in order to achieve a sustainable future, collaboration is key.
“This platform will serve as a virtual meeting place, fostering dialogue, encouraging partnerships, and driving collective action towards a more sustainable future. We are pleased to be among the first two founding partners of this initiative, believing that coalition and collaboration provide a powerful path towards achieving sustainability goals.”
Ministry & NIHERST, Shell provide STREAM kits
In a joint initiative, the National Institute of Higher Education, Research Science and Technology (NIHERST), Shell TT and the Ministry of Education handed out 11 STREAM school kits, valued at $220,000, to 11 schools.
Karen Ross of NIHERST said the STREAM (Science, Technology, Research, Engineering, Arts and Mathematics) project aims to bolster the national talent pool and promote economic diversification by nurturing critical thinking, problem-solving and competence within the education system.
The kits, intended to enhance the availability of classroom resources, aligned with the Ministry of Education’s objective of “fostering 21st-century skills, self-directed learning in both teachers and students and the development of students’ behavioural, emotional, and cognitive abilities.”
Natasha Skinner-Rocke, deputy chairman at NIHERST said, “These kits that are handed to you are unlocking a world of endless possibilities. “Each one of these kits is another success story waiting to be written, another idea to be tested, another experiment waiting to be conducted.”
The kits are catalysts for change, designed to ignite a passion for science, technology, engineering, the arts and mathematics.
“I hope for a future where intellect reigns supreme and every dream is attainable. These kits make you (students) explorers and researchers, you hold the keys to the world.”
Shell TT social performance and social investment advisor Ryssa Brathwaite emphasised that providing schools with the necessary resources was important.
“If we provide schools with the resources they need to empower young people, we are fuelling the next generation of scientists, innovators, and engineers, not just to support the work being done in the energy sector but TT as a whole.”
Marc Fernandez, of Blanchisseuse Secondary School, expressed his gratitude to all stakeholders involved in the STREAM kit initiative.
“A lot of the time we attend workshops, they tell you what to do in the classroom, but this initiative gave us a hands-on approach. They sent us to workshops and provided resources. At Blanchisseuse Secondary School, there are a lot of students who are hands-on learners and these kits are structured around this type of learning, which would really help with their retention in the classroom.”
Sheldon Sabga, a pupil from Guayaguayare Secondary School, said, “I hope this will go viral on social media and students will see it have other things you can do instead of fighting.”
The kits included 100 devices and apparatus. Among the displayed devices were computer circuit boards, digital multimeters, air quality sensors, a wind energy education kit, and a geometric building set.