US axes Shell and BP’s licenses for cross-border gas fields

The U.S. government’s Office of Foreign Assets Control (OFAC) has changed its mind about two special licenses – operated by the UK-headquartered Shell and BP, respectively – for gas fields straddling the maritime boundary between Venezuela and Trinidad and Tobago. This is part of America’s zest for tightening its grip on Venezuela’s government, putting an end to dreams of processing Venezuelan gas in Trinidad and Tobago.

Venezuela has been on the United States’ sanctions list for years, and OFAC’s move to revoke the previously granted licenses to Trinidad and Tobago for the development of the Dragon and Cocuina gas fields comes a month after Chevron was given a 30-day deadline to bring a wind-down of its crude oil production and exports in the South American country to an end.

Trinidad and Tobago and Venezuela signed the agreement for the joint exploitation of gas in the territorial waters shared by the countries, as well as to work together on the Dragon field, on September 21, 2023. Thanks to OFAC licenses, BP and Shell were given the green light to move forward with the development of gas projects that are seen as important to ensure energy security in the region.

The Dragon field in Venezuelan waters near the maritime border with Trinidad is said to hold up to 4.2 trillion cubic feet of gas, which was planned to be exported to Shell’s Hibiscus platform offshore Trinidad and Tobago. To enable this, a geophysical and geotechnical survey was on the agenda in October 2024 as part of preliminary works on the project, only ten months after the country got its hands on a 30-year license to explore, produce, and export gas from the Venezuelan field.

On the other hand, the second license for energy projects between Venezuela and Trinidad and Tobago, issued by the United States, was handed out to BP and Trinidad and Tobago’s National Gas Company (NGC).

The two-year license was obtained from OFAC in June last year to explore and develop the cross-border Manakin-Coquina gas field in the Caribbean. This field is estimated to contain around 1 trillion cubic feet (tcf) of gas reserves.

Stuart Young, Trinidad and Tobago’s Minister of Energy and Energy Industries, who used to feel optimistic about the opportunities for cross-border gas with Venezuela, has confirmed that the U.S. gave the country a wind-down period until May 27, 2025.

Young highlighted: “This does not come necessarily as a surprise, seeing how volatile things are, not only with respect to the policy with Venezuela, but what we’re seeing, for example, with the application of tariffs.”

In response to the news that two OFAC special licenses for the gas fields have been revoked by the U.S. government, the Energy Chamber of Trinidad & Tobago described the development as disappointing but not unexpected, given the previous cancellation of other general and special licenses for companies working in Venezuela.

“The importation of pipeline gas from Venezuela for processing and onward sales to international markets as either LNG or petrochemicals, remains a significant economic opportunity for Trinidad & Tobago. It is important that the government of Trinidad & Tobago continues to engage actively with both the government of the United States and Venezuela to find a mechanism to pursue this opportunity,” emphasized the Energy Chamber.

“At the same time, there are significant opportunities to develop natural gas fields within Trinidad & Tobago’s exclusive economic zone and these must also be pursued actively and urgently. There are a number of fields, including Mento, Coconut, Ginger and Manatee, that are currently being developed and others, including Calypso, Blackjack and Onyx where companies are working towards taking a final investment decision.”

The Energy Chamber of Trinidad & Tobago is adamant that all of these opportunities should be pursued to help maintain and increase the Caribbean nation’s upstream gas production. BP recently brought online a gas project offshore Trinidad and made a final investment decision (FID) for another development.