WASHINGTON/SPAIN, Jan 24 (Reuters) – The Biden administration has granted Trinidad and Tobago a license to exploit a major gas field in Venezuela’s territorial waters, U.S. and Trinidadian officials said on Tuesday, marking further easing of some sanctions. On Venezuela.
The license, granted by the US Treasury Department at Trinidad’s request and aimed at improving energy security in the Caribbean region, means the island nation can do business with Venezuela’s heavily sanctioned state oil company PDVSA over the Dragon gas field.
Prime Minister Keith Rowley, speaking at a press conference in Port of Spain, said Trinidad expects to have access to 350 million cubic feet of gas per day from the Draco field.
He said he applied for the license in mid-2022 and was approved after discussing it with top US officials, including US President Joe Biden, while keeping the channel of communication open with Venezuelan President Nicolas Maduro.
A senior US official told Reuters on condition of anonymity that “the Maduro regime will not be allowed to receive cash payments from this project” and all remaining US sanctions would remain in place and apply.
The decision was the result of extensive diplomacy by Vice President Kamala Harris and Caribbean leaders in an effort to ensure regional energy security and reduce dependence on resources from other countries, including Russia, the official said.
“The Vice President of the United States has been a careful and devoted listener,” Prime Minister Rowley said.
PDVSA has discovered 4.2 trillion cubic feet (TCF) of reserves in Dragon, on the Venezuelan side of its maritime border with Trinidad. The project was in production more than a decade ago, but stalled due to a lack of capital and partners, as well as sanctions.
Under US sanctions, companies and governments must obtain approval from the US Treasury Department to do business with PDVSA. The Biden administration has issued just a handful of such licenses since taking office in January 2021, mostly on a very limited basis.
The license follows a round of talks between Maduro’s socialist government and the opposition in November aimed at finding a way to new elections. But Maduro, whose 2018 re-election bid was widely derided by Western governments as a sham, has since resisted sending his negotiating team to the table.
As Maduro’s hand has been strengthened by fractures within the opposition and the erosion of diplomatic isolation in Latin America, it was not immediately clear whether the new U.S. license could help him engage in a new round of talks in Mexico.
THE NEED FOR REGIONAL ENERGY IS FOCUSED
One of Washington’s main goals appeared to be a response to US partners in the Caribbean who have called for help to combat high energy prices following Russia’s invasion of Ukraine.
“The vice president conveyed to the prime minister that the Treasury Department will take action to help meet the region’s long-term energy needs,” Harris’ office said in a statement, referring to a phone call with Rowley on Tuesday.
The license will allow PDVSA, Shell ( SHEL.L ) and Trinidad to jointly plan and develop a gas export project after agreeing on details expected in the coming days. Some of the resulting gas will be exported to Jamaica and the Dominican Republic under the terms of the two-year license, Rowley said.
Trinidad is Latin America’s largest exporter of liquefied natural gas (LNG), with an installed capacity of 4.2 billion cubic feet per day (bcfd) to process LNG, petrochemicals and power. However, its gas production is slightly less than 3 billion cubic meters per day.
Experts say that even if Washington grants Trinidad’s request, it could take years of investment and effort to get Venezuelan gas to Trinidad and promote LNG exports.
Additionally, without the authorized payments to Venezuela, it may be difficult for Trinidad to strike a deal with Caracas.
Cash-strapped PDVSA is expected to launch the Dragon project on Venezuela’s side. The US permit could open the door to moving forward with another gas project with Trinidad, the Laurent-Manat fields.
In November, the United States granted Chevron ( CVX.N ) a six-month license to expand operations in Venezuela and supply oil to the United States.
The Chevron license was one of Washington’s first significant steps toward easing sanctions as an incentive for Caracas to work with opposition leaders.
Reporting by Matt Spetalnik in Washington, Marianna Paraga in Houston and Curtis Williams in Port of Spain Editing by Rosalba O’Brien
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