Approvals obtained, but Dragon Deal almost at 'standstill'
Formal approvals for the Dragon Gas deal have been obtained by Petróleos de Venezuela, S.A. (PDVSA), but the current political crisis in Venezuela has left the execution of the deal at a standstill.
The deal, is a partnership involving the National Gas Company (NGC), Royal Dutch Shell and PDVSA to purchase and transport gas from Venezuela’s Dragon Gas Field to the Hibiscus platform via a 17 km pipeline.
The Dragon Gas Field contains approximately 2.4 trillion cubic feet of natural gas and is projected to produce an estimated 150 million cubic feet per day in the first year of operation, with plans to increase to 300 million cubic feet later on.
Responding to a question in the Senate on Tuesday from Opposition Senator Wade Mark on whether the deal needed to be ratified by the Venezuelan National Assembly, Energy Minister Franklin Khan said the state-owned Venezuelan oil and natural gas company has provided contractual representation that all requisite approvals and consents have been obtained.
As to the next steps in the agreement, Khan said while a term sheet agreeing to a quantity and price has already been signed by the three entities, the process is now at a virtual standstill owing to the current political situation in the South American country.
“The rest of the agreement is formalisation of the other clauses and that has been taking some time. It is no secret that it has slowed down almost to a standstill based on what is currently transpiring in Venezuela,” the Minister said.
Asked whether sanctions imposed by the US against PDVSA played a part in the delay in the conclusion of the deal, Khan said he could not speak on behalf of the Venezuelan company, but indicated that that sanctions would not affect Shell or the NGC.
“But, the whole process has slowed down, largely because of the current situation in Venezuela,” he restated.
Pressed further by Mark on a time period for the conclusion of the process, Khan maintained that the deal is one that can stand commercial scrutiny, and is to the benefit of both nations.
“It is in the interest of the Venezuelan people and the Venezuelan economy as the supplier of gas at a reasonable and competitive price.
It is beneficial to the people of Trinidad and Tobago to have an additional gas supply source from right next door for long term stability of supply.”
Describing the deal as “symbiotic” Khan said he holds the view that once the situation improves in Venezuela the finalisation process will come to its natural conclusion and will be executed.