Gas may serve as pretext for Venezuela to spar with T&T [Gas in Transition]

Tension between Washington and Caracas is hardly a new phenomenon. As the Congressional Research Service (CRS) noted in a report published last month, the US government has been restricting trade with the South American state since 2005 by imposing sanctions on a number of “Venezuelan individuals and entities that have engaged in criminal, anti-democratic and/or corrupt actions.”

However, the sanctions regime became much stricter in early 2019. At that time, the administration of US President Donald Trump responded to reports that Venezuela’s incumbent President Nicolas Maduro had used fraudulent means to ensure his re-election the preceding December by barring investment in the country’s oil industry. Subsequently, Trump’s team took additional steps to restrict Venezuela’s access to other goods and services that were necessary to move crude oil and petroleum products to market, such as equipment, replacement parts, technical expertise, credit, insurance and shipping.

Those restrictions were still in place when Trump’s successor Joe Biden assumed the presidency in 2021. Many of them are still in effect, but the Biden administration did start to loosen the sanctions regime in the second quarter of 2022, when it permitted Italy’s Eni and Spain’s Repsol to resume implementation of oil-for-debt swap deals. Washington then took another big step in that direction in November 2022, when it permitted the US major Chevron to resume some of its Venezuelan operations, and another in January 2023, when it gave Trinidad and Tobago a green light to negotiate with Venezuela’s national oil company (NOC) PdVSA on Dragon, a natural gas project stalled since 2018.

Since then, the US has taken an even bigger step in the direction of normalisation. In October of this year, it agreed to start lifting sanctions after Venezuela’s government signed an agreement with the country’s political opposition on elections in 2024.

There is hardly any guarantee that this momentum can be maintained. On the one hand, Maduro’s government has failed to uphold all of its commitments under the agreement with the opposition, despite warnings from Washington that sanctions may be reinstated if it persists.

On the other hand, Caracas has also stepped up long-standing territorial claims against neighboring Guyana and refused to wait for a ruling from the International Court of Justice (ICJ) on the matter. That is, it has laid claim to about two thirds of the land within Guyana’s internationally recognized borders, as well as a large swathe of Guyana’s internationally recognised offshore zone. The latter includes the Stabroek block, a licence area operated by the US major ExxonMobil. Stabroek, which contains at least 11bn barrels of oil equivalent (boe) in recoverable reserves, is home to Guyana’s only producing oilfields.

As a result, Venezuela’s actions – and its attempt to legitimise its claims through a domestic referendum – have been widely criticised as an asset grab. They have also drawn the disapproval of regional blocs such as the Organization of American States (OAS) and the Caribbean Community (Caricom) – and of the US, which has indicated that this issue might also lead to the reintroduction of sanctions.

Plataforma Delta – and Manatee

But Venezuela’s mischief-making might not stop there. The South American state may also be gearing up for a spat with Trinidad and Tobago – and this time, a natural gas project appears to be the pretext.

The project in question concerns Plataforma Deltana, an offshore block that lies along the maritime border between Venezuela and Trinidad and Tobago. More than 10 years ago, PdVSA opened the block up for exploration to a number of international oil companies (IOCs). And according to a report from Reuters, they did find gas there – at least 8 trillion ft3 (226.5bn m3) of it.

Despite the discoveries, PdVSA was unable to make arrangements for development. This was partly due to lack of capital and partly because Caracas was slow to reach an agreement with Port of Spain on the sharing of gas fields that extended beyond the maritime border into Trinidad and Tobago’s waters, Reuters said.

Nevertheless, the two sides did manage to strike a deal on the Loran/Manatee field in 2019, the news agency said. That agreement allowed Shell to assume control of Manatee, Trinidad and Tobago’s portion of the field, and the multi-national now hopes to make a final investment decision (FID) on the project in 2024 and begin gas production in 2028, it reported.

In September of this year, though, Maduro signaled that he was interested in altering the deal. As Reuters noted, the Venezuelan leader informed Trinidadian government officials in public comments that he now believed Manatee should be developed jointly – as part of the unitised Loran/Manatee site – rather than split into two national sections.

This was not necessarily an idle or throwaway remark. Reuters reported earlier this month, citing five anonymous sources close to the talks, that PdVSA had invited some of the IOCs that had originally discovered gas at Plataforma Deltana to resume talks on developing the block. According to the sources, PdVSA is particularly keen on securing a partner for Sections 2 and 4 of the block, as these contain the Venezuelan sections of the Manatee and Manakin gas fields, which Trinidad and Tobago has assigned to Shell and BP respectively.

It is not yet clear whether any of the IOCs involved are interested in Plataforma Deltana – or whether they have responded to PdVSA’s invitations. Nor is it clear whether Port of Spain is paying any heed to Maduro’s suggestions for joint development of offshore gas fields. Reuters did attempt to secure more information, but its queries did not elicit any replies from Chevron, Shell, PdVSA, the Venezuelan Oil Ministry or Trinidad and Tobago’s Ministry of Energy and Energy Industries (MEEI).

In terms of risk levels, Maduro’s change of course on the division of Plataforma Deltana gas resources with Trinidad and Tobago probably ranks below Venezuela’s territorial claims on Guyana. After all, it hasn’t involved a referendum, an appeal to the United Nations or arguments in the ICJ. However, it should not be overlooked. Instead, it should serve as a reminder – both to the IOCs that are considering teaming up with PdVSA and to the US government officials overseeing decisions on sanctions – that the Maduro regime is not necessarily a trustworthy partner.