Young: We’ll succeed in negotiating the dragon deal

The content originally appeared on: Trinidad and Tobago Newsday

Energy Minister Stuart Young – FILE PHOTO/AYANNA KINSALE

ENERGY Minister Stuart Young was confident that the deal for TT to receive gas from Venezuela’s Dragon gas field would not be stymied by conditions laid down by the US Government for this project, including how TT will pay for the gas and for how long would the project be exempted from US sanctions against the Venezuelan Government, initiated over alleged election rigging. He was addressing a post-Cabinet briefing on Thursday at the Diplomatic Centre, St Ann’s.

In 2018, the Prime Minister and Venezuela President Nicolas Maduro danced in a conga line in the Miraflores Palace in Caracas after inking a deal for TT to buy Venezuelan gas and monetize it on the world market for the benefit of TT and Venezuela, but the project stalled when sanctions bit Maduro’s regime.

However, Russia’s invasion of Ukraine a year ago led to a western boycott of Russian oil and gas for which fresh suppliers had to be sourced, after which the US Government partially eased sanctions on Venezuela.

The US Treasury Department’s Office of Foreign Assets Control (OFAC) gave a two-year waiver to allow let the Dragon deal.

Dr Keith Rowley on January 24 welcomed this as “a giant step forward,” despite much work to do on the deal, but Maduro accused the US of colonialism and dictatorship for saying TT must use other means than money to pay for Venezuela’s hydrocarbons.

Young said at the recent Caricom Heads meeting in The Bahamas, the US had reinvigorated its relationship with Caricom, in areas including energy.

He said within a few weeks he would visit Houston, Texas, for a week to meet US officials on energy.

“This morning I returned from my second visit to Venezuela since we’ve been provided with the OFAC licence to proceed with development of the Dragon field.

“I can tell you without getting into any details at this stage because it’s premature that I will hopefully be leading a team and a delegation, of experts and technical persons in three weeks time, in the second week of March, back to Caracas for us to continue these conversations and negotiations that are step on the right pathway for us to be able to jointly develop the Dragon gas field and hopefully bring it to production in TT as well as in Venezuela.”

Asked about Maduro’s upset about payment methods, Young said Maduro had not singled out TT in his remarks.

“We have been in constant contact with the President Maduro Government at the highest levels including the President himself.

“I don’t see there being an issue. There are always ways for us to proceed.”

Young recalled a “very, very encouraging conversation” he had on Thursday morning in Caracas.

“I think it paved the way forward to be able to satisfy Venezuela and TT.”

Newsday asked if the OFAC’s two-year allowance was too short a time line to invest in the Dragon field, especially if the Ukraine War ends and sanctions are reimposed on Venezuela. Young said the Dragon deal had been long under way and was unrelated to any developments in the Ukraine War.

He added, “OFAC does not grant waivers or licences for more than two years, so that is the longest for which they will grant a licence, for obvious reasons, because it is really a waiver from sanctions. We are in constant conversations with the US Treasury and in particular OFAC and we don’t see that as an issue.

“In fact the conversation I had with US Government officials on the morning that they were going to announce the grant of the OFAC licences, this was one of the main discussion points between us and we are entitled to apply for renewals etcetera.

“They said, ‘Do not worry, because this is the longest we can grant. We see that you have applied for a ten year and whilst we are prepared to consider, unfortunately OFAC doesn’t grant for longer than two years.'”

Young said the two-year limit was not affecting the progress of the dragon deal, although he would not offer any time line as to when that gas would come to market.

He said that up until 2018 “significant work” had been done on the dragon deal, with first-gas having been due by 2020 (although since curbed by the sanctions.)

Young said people did not see the work being done on energy behind the scenes, and it had been quite a feat for TT to achieve an OFAC licence.

Recalling energy deals such as the Atlantic LNG restructuring, plus the Manatee, solar and National Gas Company projects, he said,”We are accustomed to facing sophisticated persons on the other side in difficult situations and we have always come out on the better end for TT.”

He said in Venezuela on Wednesday he had met Vice President Delcy Rodrigues, Oil Minister Tariq Al-Asami and the PDVSA president.

“We are having the conversation as to how this thing can be structured.”

Otherwise he was unfazed by current low prices for natural gas at Henry Hub (Louisiana), saying TT sells its gas at a basket of prices of European and Asian prices.

He said he had been approached on the mothballed Pointe-a-Pierre refinery at the recent Guyana energy conference and did not think it would be rivalled by any proposed Guyanese refinery which he said was expected to be smaller than TT’s facility.