U.S. scuttles bet of gas-hungry Trinidad on Venezuela

The Trump administration has scuttled an incipient tie-up between gas-rich Venezuela and its gas-hungry Caribbean neighbour Trinidad and Tobago, the latest punch in a revived U.S. campaign to isolate Caracas.

The U.S. Treasury Department has revoked two licenses that had authorised Trinidad to tap Venezuela’s abundant offshore gas reserves to help sustain its exports of LNG, ammonia, methanol, and other gas-based products.

The gas plan “is now postponed, if not dead,” Francisco Monaldi, an energy expert at Rice University in Texas, told Gas Outlook.

Trinidad, the Caribbean’s industrial powerhouse, has long looked to Venezuela to top up its declining domestic gas production. Output peaked at four billion cubic feet per day in 2010, and since then, gas rationing has become routine. The country’s Atlantic liquefaction complex, a regional LNG pioneer led by Shell and BP, has been under-utilised for years. One of four production trains is shut down. Petrochemical plants have spare capacity too.

In contrast, nearby Venezuela has mammoth gas reserves that are mostly undeveloped, or worse — flared. The country is a notorious stain on methane maps.

So commercially, and perhaps even environmentally, the match-up makes sense. In 2018, the two countries forged a preliminary gas agreement, only to see it fall apart in early 2019 when the first Trump administration imposed oil sanctions on Venezuela in an ill-fated effort to unseat autocrat Nicolás Maduro.

After intense lobbying in Washington, Trinidad persuaded the Biden administration to sign off on licenses to get the gas plans back on track. In 2023, Trinidad’s government and its state-owned National Gas Company secured a license from the Treasury Department’s Office of Foreign Assets Control (Ofac) to develop the Dragon offshore gas field in eastern Venezuela. NGC brought on Shell, its partner in the Hibiscus production platform in Trinidadian waters only around 20 kilometers from Dragon. Under a separate Ofac license for the Cocuina field on the maritime border, NGC partnered with BP. The licenses permitted Trinidad to pay Venezuela for future gas produced at the two fields.

After NGC and Shell struck a 30-year exploration and production contract with Venezuela’s state-owned PdVSA for Dragon, the European major had started inspecting existing infrastructure and was working toward contracting a rig.

Then the news landed from Washington.

In an April 8th press conference to announce that the licenses had been rescinded, outgoing Prime Minister Stuart Young conveyed a sense of betrayal.

U.S. Secretary of State Marco Rubio and envoy Mauricio Claver-Carone had assured him in late March that the White House decision to ratchet up pressure on Venezuela “would not harm Trinidad and Tobago,” Young told reporters.

Trinidad will now try to persuade the Trump administration to reverse the decision, vowed Young, who had personally lobbied officials in Washington for years, first as energy minister and then as prime minister, to facilitate access to Venezuelan gas.

But Young has now lost the ability to knock on the White House door. In an April 28th parliamentary election, his centre-left party, the People’s National Movement (PNM), was defeated by the centrist United National Congress (UNC) party, propelling Kamla Persad-Bissessar back into the prime minister’s office.

Packing up

Under the terms of the license cancellations, Trinidad, and by extension Shell and NGC, have to end any work in Venezuela by May 27th.

Washington’s swing back to so-called maximum pressure on Caracas has been building for weeks at the behest of Rubio and Claver-Carone, two Cuban-Americans who are ending the limited commercial engagement that was started under Biden. In late March, the administration revoked the licenses of Chevron and other oil producers and traders, putting the Maduro government in an immediate economic bind.

For Venezuela, the gas projects with Trinidad offered a longer-term opportunity to monetise a resource that it has long neglected in favour of oil. Another potential casualty of Washington’s pressure tactics is Cardon IV, an offshore joint venture in western Venezuelan waters run by European firms Repsol and Eni. Their authorisations to carry out oil swaps with Venezuela to recover payment for the Cardon IV gas production it sells to PdVSA have also been revoked.

Venezuela “failed to monetise its natural gas resources both on the western side and now on the eastern side,” Luisa Palacios, a scholar at the Center for Global Energy Policy at Columbia University in New York, told GO. “This is bad for Venezuela and bad for Trinidad.”

And yet for Trinidad, the loss of the licenses is “maybe not as catastrophic as it would have been last year or the year before,” Schreiner Parker, managing director for Latin America at Rystad Energy, explained to GO. He points to new upstream activity at home.

In mid-2024, Shell took a final investment decision to develop the Manatee field in shallow waters on the Trinidadian side of the cross-border deposit known as Loran-Manatee. Production is due to begin in 2027 and reach a peak of 0.6 bcf/d. Australia’s Woodside Energy is considering FID on its deepwater Calypso project. BP has stepped up Trinidadian drilling as well.

Rystad is now projecting that Trinidad´s domestic gas production will rebound to 3.7 bcf/d in 2030, compared to 2.53 bcf/d last year.

As for Venezuela’s stranded gas, Monaldi thinks the tie-up with Trinidad might eventually make a comeback, if the Trump administration reverses course or if there is regime change in Caracas. “I tend to think that it can be revived under certain conditions,” he said. “But now it will be postponed for years probably, and that’s a big blow.”

(Writing by Patricia Garip; editing by Sophie Davies)