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Infrastructure allows Venezuela to offer gas to Trinidad

Following several rounds of negotiations, Venezuela and Trinidad will trade gas

After 12 years of negotiations between the energy ministries of both countries, gas reserves that are on the Venezuelan side of the border with Trinidad & Tobago will finally start to be exploited, with monetisation through the existing infrastructure on the Trinidad side.

Having no facilities for processing and transmitting gas in the Plataforma Deltana region northeast of the Orinoco River delta where the cross-border gas is situated, Venezuela has come to the conclusion that it makes more economic sense to send its share of the gas in the most important pair of discoveries – Manatee on the Trinidad & Tobago side in block 6D and Loran in Plataforma Deltana block 2 – to Trinidad to be fed into LNG trains or even for domestic use in petrochemical plants.

The blocks are held by BG/Chevron and PdVSA/Chevron, respectively and are estimated to contain 10.25 trillion ft³, split 2.69 trillion ft³/7.56 trillion ft³ in favour of Venezuela.

How much is likely to be commercially recoverable has not yet been publicly announced but this project is very significant for three reasons:

1. It provides more gas for Trinidad & Tobago at a time when production from the major existing offshore gas fields (there aren't any of significance on land) is declining.

2. It marks Venezuela's first incursion, albeit indirectly, into liquefied natural gas (LNG), where the cross-border reserves are most likely to be used.

3. It is the first cross-border marine reserves agreement of its kind in the western hemisphere.

What's more, Manatee and Loran are not the only cross-border reserves that straddle the maritime boundary line between the two states: there are two other pairs of gas discoveries – Manakin (block 5b, Trinidad) and Coquina (block 4, Plataforma Deltana) and Kapok (BP's acreage in Trinidad) and Dorado (block 1, Plataforma Deltana).

What is called a “field specific treaty” has been signed by the two parties in relation to Manakin and Coquina but an actual unitisation agreement requires more work.

How fast Manatee and Loran are actually brought on stream will be determined by the speed with which both sides can work out the project details. According to Trinidad & Tobago's new minister of energy and energy industries, Nicole Ollivierre, “it has been agreed that both countries will follow-up with the participating companies operating within their jurisdictions, to finalise the unit operating agreement.”

The unit operator which will be responsible for leading the effort has not yet been publicly announced but the obvious candidate is Chevron, which holds 50% in block 6D and 39% in block two and is in good nick with the Venezuelan authorities, unlike most international oil companies (IOCs).

The actual drilling for gas is likely to take place in Venezuelan waters, with production routed through a pipeline extension across the border from Trinidad, which now terminates in BP's acreage.

Differing dates have been offered by various parties as to when cross-border gas will start being delivered to Trinidad. Perhaps the most authoritative source, the Natural Gas Master Plan, prepared by the UK's Poten and Partners, during the regime of the previous minister, Kevin Ramnarine, suggested 2022, seven years from now.

Long before that time, one of the world's leading IOC's Shell, is likely to have entered the picture, via its planned take-over of the BG Group, which has the other 50% in block 6D.

Luis Prado, a Venezuelan national, who is chairman of Shell's companies in both Trinidad & Tobago and Venezuela, is fully behind cross-border gas exploitation, telling Petroleum Economist that he “well understood” the “significance of such gas for both countries.”

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