Argus Media Ltd.

Argus Media Ltd.

Trinidad gas flows rising, Venezuela plan fades

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Source: Argus Media Ltd.

Kingston -- Trinidad and Tobago's natural gas production is extending a slow recovery from a seven-year slump in the face of fading short-term prospects for Venezuelan supply.

Output in February averaged 3.956 Bcf/d, up by 8.6pc from January, according to data released today by the energy ministry. Production in January-February averaged 3.798 Bcf/d, 0.7pc more than a year earlier.

Trinidad's gas production has been recovering since November 2017 following a slide from a peak of 4.3 Bcf/d in 2010. The shortfall caused routine supply curtailments that eroded production of LNG, ammonia and methanol.

The country had been hoping to top off domestic flows with supply from Venezuela's offshore Dragon field. But Venezuela's self-declared interim president Juan Guaidó's appointment in early April of an expanded administrative board for state-owned oil company PdV has further set back the plan 'as we do not know which PdV we should speak to,' a Trinidadian energy ministry official toldArgustoday.

'Nothing is happening with this project,' the official said. 'To describe it as frozen would be putting a positive spin on it.'

Trinidad and Venezuela signed a term sheet in late August 2018 for Trinidad to purchase an initial 150mn cf/d of gas from Dragon starting in 2019-20, with volumes slated to double to 300mn cf/d. Shell would be the main participant in the project, from the wellhead to its Hibiscus platform off Trinidad.

'Domestic issues in Venezuela will delay the Dragon deal, but the deal is still on track,' Trinidad's energy minister Franklin Khan said on 13 March.

Venezuela is engulfed in an unprecedented economic and political crisis that has been worsened by US oil sanctions that are aimed at unseating the country's president, Nicolas Maduro.

The sanctions include withholding payments for purchases of Venezuelan oil in favor of the political opposition. The sanctions apply to crude and oil products, and do not mention natural gas.

The US, Canada and most of Latin America recognize opposition-controlled National Assembly speaker Guaidó as interim president. Trinidad still regards Maduro as the president of Venezuela.

The political turmoil has also lengthened the odds of concluding eight years of negotiations between Venezuela and Trinidad to tap 10 trillion cf of gas in the Chevron-operated Loran-Manatee field – the biggest of three cross-border maritime deposits.

But Trinidad's gas output will continue growing in coming months thanks to BP's 600mn cf/d offshore Angelin project that was commissioned in February, the energy ministry official said. 'And there are other projects that will lift domestic output.'

BP remains the country's biggest producer, with output averaging 2.124 Bcf/d in February, 10.2pc up on January. Other major producers are Shell, BHP and EOG Resources.

In the longer term, BP is projecting output of 1.2 Bcf/d from its offshore Cassia project 57km off the southeastern coast of Trinidad that will be commissioned in early 2021. BP contracted US services company McDermott to construct a compression platform for the project.

UK-Australian BHP that operates nine deepwater blocks in Trinidad said on 17 April it had found unspecified volumes of hydrocarbons in the Bélé-1 well in block 23(a) northeast of Tobago.

Bélé-1 is the first of a three-well program to test prospects around the 2018 Bongos discovery, the company said. The well was spud on 2 March by theDeepwater Invictusrig.

BHP holds a 70pc share in block 23 (a) with BP holding the remaining 30pc.

BHP discovered 4 trillion to 5 trillion cf of gas in the deepwater LeClerc well off the east coast of Trinidad, the company said in October 2017. The discovery is the first in the country's deepwater program which not yielded any production so far.

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