OREANDA-NEWS. LNG exporter Trinidad and Tobago's state-run gas company NGC is offering to finance the construction of a pipeline to transport the gas it plans to purchase from Venezuela's Dragon field.

The gas will help revive Trinidad's LNG production and supply projects such as Japanese Mitsubishi's $1bn methanol and DME complex that have been stalled because of a gas shortage, Prime Minister Keith Rowley said yesterday.

Trinidad and Venezuela reached a preliminary gas deal on 23 May during a visit by Venezuela's President Nicolas Maduro.

Maduro and Rowley also agreed to set up a joint venture to market LNG that will be produced at Trinidad's Atlantic liquefaction complex using gas from the Venezuelan side of the 10.25 trillion ft³ cross-border Loran-Manatee field.

Dragon could have 12 trillion-13 trillion ft³ of gas, Rowley said. "The field is 17km from existing pipelines in Trinidad and Tobago, and Trinidad is prepared - by way of our NGC - to ensure that pipeline is built."

Dragon is part of Venezuela´s undeveloped Mariscal Sucre offshore gas project.

Chevron is the longtime designated operator on both sides of Loran-Manatee, and for Dragon, but the fields have never moved into development mainly because of border issues, Venezuela´s challenging contract terms and a lack of Venezuelan capital for required infrastructure.

"Chevron looks forward to continuing our work with both the governments of Venezuela and Trinidad to develop the Loran-Manatee gas resource," the company said yesterday.

Rowley gave no cost estimates for the pipeline, and did not indicate the volumes of gas to be bought. "These are matters to be negotiated in the next few weeks in discussions involving the two countries and Shell that owns the Hibiscus platform at which the gas from Dragon would land to be tied into the national pipeline network," an official of Trinidad's energy ministry told Argus today.

The energy companies have been more circumspect. Shell said today it "has a long-term presence in both Venezuela and Trinidad and Tobago, and we frequently consider potential business opportunities in both countries. However, there is no information to share at this point in time."

Atlantic has said it is "encouraged" by the potential to liquefy Venezuelan gas.

The 14.8mn t/yr Atlantic liquefaction complex is owned by BP, Shell, China's sovereign wealth fund CIC unit Summer Soca and NGC.

"Once we operationalize this decision, the downstream industry in Trinidad and Tobago would have moved from a period of uncertainty and gas curtailment to a period of satisfaction, where there would be enough gas for a long time to satisfy the needs of all industries," Rowley said.

The Venezuelan gas would also "lift the cloud" from Mitsubishi's plan to construct 1mn t/yr methanol and 20,000 t/yr DME plants. Construction was scheduled to have started this year, but had been delayed by "uncertainty as to where the gas will come from," he said.

Venezuela and Trinidad had earlier agreed that 73.75pc of Loran-Manatee belongs to Venezuela and the other 26.25pc to Trinidad. The field covers block 6 on the Trinidadian side of the maritime border and block 2 on the Venezuelan side.

"We have signed the relevant memoranda that allow Venezuela and Trinidad and Tobago to direct operating companies to proceed on the cross-border developments," Rowley said.

Negotiations have sputtered for several years on exploiting the cross-border fields that contain a total estimated 11.5 trillion ft³. But this week's agreements will expedite the exploitation of the deposits, Trinidad's energy minister Nicole Olivierre said.

"We have reached the stage where we feel we are much closer to actually signing off on the unitization and unit operating agreement which would then lead to the submission of a development plan," Olivierre said.

Venezuela's state-owned oil company PdV has not commented on the gas agreements with Trinidad, but energy minister and PdV chief executive Eulogio Del Pino has previously said it makes commercial sense. Still, the role of the cash-strapped company in developing the reserves, and the impact of Venezuela's deepening economic and political problems, are unclear.

Venezuela launched its first-ever offshore gas production last year at the Cardon 4 block's Perla field, which is operated by Spain's Repsol and Italy's Eni. PdV has so far stayed on the sidelines because of a lack of capital, rendering Cardon a rare 100pc private-sector venture in Venezuela.