You are here
Venezuelan gas—good move for T&T
Last Saturday’s signing of an agreement between T&T and Venezuela for the export of natural gas from Venezuela to this country has the potential to lead to further downstream investment in T&T.
It is also a major success for both the government and for Shell Trinidad which is partnering with the National Gas Company on the construction of the pipeline from North Eastern Venezuela to its Hibiscus platform off the North Coast.
Over the last decade there has only been one additional downstream project started in the country, that being the Mitsubishi methanol plant that is being constructed at La Brea.
A major reason for the lack of new investment has been the shortage of natural gas that had plagued the country since 2011 but which has intensified since 2014. Uncertainty of a gas supply and the increased prices that are being demanded by the NGC are major reasons why investors have dried up in the Petrochemical sector.
Take, for example, the recent decision by the Proman group to build its methanol plant in the United States. Sources tell Business and Money that the company, which has significant investments in T&T, would have preferred to build it here but the conditions did not allow for it. The loss of such a plant is a loss of jobs for locals in the construction phase and a loss of a stream of revenue and foreign exchange to the ex chequer.
It is why this deal with Venezuela is so important.
In a real sense 300 million standard cubic feet of gas is a relatively small tranche, especially when you consider that this country’s demand is closer to 4.5 bcf/d. This also opens the door for the development of a relationship between the two countries that can see further corporation and the big fish of Loran Manatee being processed in T&T.
This was not lost on Prime Minister Dr Keith Rowley who said, “We may have been able to save our industry by getting a secure source of gas for the downstream sector. It may, over time, also allow us to look at the expansion of the downstream sector and investments there, as long as we can show investors we have a secured stream of gas,” Rowley told journalists on the flight back from Venezuela.
The Prime Minister noted that the situation allows, for the first time, Venezuela gas to be processed in T&T.
“T&T is a processor and exporter of natural gas. Venezuela’s resources of natural gas have never been an input but after today...Venezuelan gas will come to the international marketplace to be monetized for the benefit of the people of Venezuela and the people of T&T and that being so, the sky is the limit,” he told reporters in Caracas.
Dr Rowley added, ”What we have just witnessed is the coming together, in a situation which existed for two years but which has now come to the fore, to be operationalised for the people of T&T and the people of Venezuela. Geologically we are connected and historically we have used our hydrocarbon resources as the engines of both our economies. There have been many changes some for better, some for worse, but in recent times under recent and current leadership, a new impetus has attended our requirement to co-operate in our hydrocarbon legacy.”
The Prime Minister admitted that the cost of building the pipeline was a concern but said Shell was helping with the estimated $1 billion needed to build out the infrastructure.
But what’s in this for Shell?
One imagines that Shell is in this for the long haul and the big fish.
For one, the company will make a profit on its investment in the pipeline. It allows the major to position itself as the leading multinational in Venezuela, a country that has become an almost pariah internationally due to its nationalisation of oilfields.
For Shell, there is also another major prize and that is the Loran Manatee field in which there is 10 trillion cubic feet of gas. That is enough gas to support an LNG train for 40 years. If the Venezuelans agree to it coming to T&T, this could be a major prize for Shell.
There are real possibilities but, as many have said, more information is needed and the issue of contract transparency needs to be addressed.
User comments posted on this website are the sole views and opinions of the comment writer and are not representative of Guardian Media Limited or its staff.
Guardian Media Limited accepts no liability and will not be held accountable for user comments.
Guardian Media Limited reserves the right to remove, to edit or to censor any comments.
Any content which is considered unsuitable, unlawful or offensive, includes personal details, advertises or promotes products, services or websites or repeats previous comments will be removed.
User profiles registered through fake social media accounts may be deleted without notice.