Trinidad offers to finance Venezuela gas pipelineOREANDA-NEWS. June 02, 2016. Trinidad's state-owned NGC has offered to finance the construction of a gas pipeline linking the country to Venezuela's Dragon field.

The gas will help revive stuttering LNG production in Trinidad and Tobago, as well as projects that have stalled because of a gas shortage, such as Japanese firm Mitsubishi's \\$1bn petrochemicals complex, prime minister Keith Rowley says.

Trinidad and Venezuela reached a preliminary agreement on 23 May during a visit by Venezuelan president Nicolas Maduro. Maduro and Rowley also agreed to set up a joint venture to market LNG produced at Trinidad's 14.8mn t/yr Atlantic complex, using gas from the Venezuelan side of the 10.25 trillion ft? (285bn m?) cross-border Loran-Manatee field (see map). Atlantic is owned by BP, Shell, China's sovereign wealth fund CIC unit Summer Soca and NGC.

Dragon could hold 12 trillion-13 trillion ft? of gas, Rowley says. "The field is 17km from pipelines in Trinidad and Tobago, and Trinidad is prepared to ensure that a pipeline is built."

Dragon is part of Venezuela's undeveloped Mariscal Sucre offshore gas project. Chevron is the designated operator of both Dragon and Loran-Manatee. But the fields have never been developed mainly because of border issues relating to Loran-Manatee, Venezuela's challenging contractual terms and a lack of Venezuelan capital to finance the necessary infrastructure.

Rowley provided no cost estimates for the pipeline, and did not indicate how much gas Trinidad intends to buy. The two countries will hold talks on these issues in the coming weeks, together with Shell, the owner of the Hibiscus platform, which would process Dragon gas for onward shipment to the Trinidadian pipeline network.

Needs analysis

Port of Spain hopes that the latest moves will ensure that Trinidad's downstream industry no longer faces curtailments, but instead has "enough gas for a long time to satisfy [its] needs", Rowley says.

Venezuela and Trinidad in 2013 agreed that 73.75pc of Loran-Manatee belongs to Venezuela and the other 26.25pc to Trinidad. The field covers block 6d on Trinidad's side of the maritime border and block 2 on the Venezuelan side. "We have signed the relevant memorandums that will allow Venezuela and Trinidad and Tobago to direct operating companies to proceed on the cross-border developments," Rowley says.

Negotiations stalled for several years over exploiting the cross-border fields, which contain an estimated 11.5 trillion ft?. But the latest set of agreements will help bring about their development, Trinidad's energy minister Nicole Olivierre says. "We are much closer to actually signing off on the unitisation and unit operating agreement, which would then lead to the submission of a development plan," Olivierre says.

Venezuela's state-owned PdV has not commented on the gas deals with Trinidad. But energy minister and PdV chief executive Eulogio Del Pino said previously that developing the cross-border fields makes commercial sense. Nevertheless, the role of cash-strapped PdV in developing the reserves, as well as the potential impact of Venezuela's economic and political problems, remains uncertain.

Venezuela began producing gas offshore last year for the first time, at the Perla field in the Cardon 4 block, which is operated by Spanish company Repsol and Italy's Eni. Cardon 4 is the only example of a 100pc private sector venture in Venezuela, as PdV has so far stayed on the sidelines of the development because of a lack of spare cash.