The U.S. government has granted an authorization for energy major Shell and Trinidad and Tobago to develop an offshore gas field in Venezuela close to the maritime border, Trinidad’s attorney general said on Thursday.
The prominent project, aimed to supply Trinidad with Venezuelan gas, has progressed slowly in recent years amid frequent U.S. policy changes towards Venezuela, which has remained under U.S. energy sanctions since 2019.
Because Venezuela and state company PDVSA are under U.S. sanctions, foreign companies abiding by the measures need authorizations or licenses to negotiate and develop energy projects there.
The Trump administration in April terminated previous licenses granted by former President Joe Biden’s government to the Dragon project by Shell and Trinidad’s National Gas Company and to a similar development by BP. The plans are considered essential for securing gas for Trinidad’s liquefied natural gas plants and other industries.
Shell in the second quarter completed a marine survey at Dragon before a U.S.-set deadline to wind down the license. The exploration work is expected to help determine drilling locations and pipeline design.
The new authorization, granted on Wednesday by the U.S. Treasury, is structured in three stages, with the first stage allowing Trinidad and Shell to negotiate the project with Venezuela and PDVSA through April 2026, but making mandatory the inclusion of U.S. companies in the development.
“You have to hit commercial targets for U.S. companies. We don’t think those targets are hard to meet. They are reasonable,” Attorney General John Jeremie said at a press conference.
He declined to disclose the license’s financial terms. Previous U.S. authorizations to Dragon have banned any cash payments to Venezuelan President Nicolas Maduro’s government.
BP did not immediately reply to a request for comment. Shell said Trinidad was the license holder, so it referred questions to the government.
The U.S. State Department in late September said Washington supported Trinidad’s Dragon gas proposal and would make sure it would not provide significant benefit to Maduro’s administration.
Dragon has proven reserves of some 4.2 trillion cubic feet, making it one of the largest deposits of natural gas in Venezuela and a possible future source of income. With insufficient reserves and output, Trinidad needs the gas to feed its revenue-generating industries, from LNG to petrochemicals.
