As Rowley and Venezuela sign gas agreement… NGC to spend $400M to build pipelines

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Prime Minister Dr Keith Rowley travels to Caracas on Monday to sign an agreement with the Venezuelan Government which will allow this country access to the Dragon Gas Fields.

So what will Rowley be signing? Sources say that that as part of the agreement, the National Gas Company (NGC) will be assigned the task of building 17 kilometres of pipe lines so that Trinidad and Tobago can access more gas to assist the failing energy sector in Trinidad.

Sources say that NGC will have to spend between US $40 and US $60 million (TT$400 million) to erect those pipelines, which will take the gas from the Dragon Fields to the BG platform on the North Coast.

The question remains: “With that money being put out by NGC to build those pipelines, how long would it take before NGC sees a profit? NGC will be hoping down the road for increased gas to assist the ailing energy companies.

Right now, NGC cannot supply enough gas to one ammonia plant or one methanol plant. “That is a drop in the bucket what we have right now,” a source at NGC added. At present, there are five methanol plants in Trinidad.

Three are down because of no gas, while the other two are operating on 70 per cent capacity. “That is hurting NGC real bad. That is a real joke. This country is suffering,” the source declared. The NGC needs billions of MMBTUs to have all the plants up and running.

The NGC also need to start producing gas from the Delta Platforms off Galeota on the island’s south-eastern coast. Those fields are jointly owned by Trinidad and Tobago and Venezuela.

One concerned energy expert added, “I note that Prime Minister, Dr Rowley will be travelling to Caracas to sign a gas sharing agreement with Venezuela in relation to the Dragon gas field. While it is initially a step in the right direction, it is in reality a beginning that has to be pursued vigorously with the assistance of skillful and knowledgeable negotiators. The process could be long and protracted if not properly co-ordinated. Therefore the terms and conditions set out in the agreement must be carefully drafted.”

He continued, “You will recall the signing of the trans-border maritime agreement in 2012 re the Loran Manatee field. It was hailed and recognised as the first such agreement in the Western Hemisphere. That agreement is being considered as a model by several States. However, has it been implemented? Is it in Force? Or are we just being overly optimistic.”

WHAT IS DRAGON?

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.

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 said in May.

Negotiations stalled for several years over exploiting the cross-border fields, which contain an estimated 11.5 trillion ft³. But the latest set of agreements will help bring about their development, Trinidad’s former energy minister Nicole Olivierre stated. “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 stated.

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.

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