With Europe pushing hard to reduce their reliance on Russian gas, in the aftermath of the invasion of Ukraine, Trinidad & Tobago’s Liquified Natural Gas (LNG) exports have come into the geopolitical spotlight, and this has also brought the issue of Venezuelan gas exports to Trinidad back onto the agenda.
In 2021, Trinidad & Tobago was the sixth biggest LNG exporter of Liquified Natural Gas (LNG) into Europe, after the USA, Qatar, Russia, Algeria, and Egypt, accounting for about 2% of the total LNG imports into Europe. Trinidad LNG is especially important in the Spanish market, where it accounted for 5% of imports in 2021. With Europe grappling with reduced supply, every source of gas has assumed additional importance.
Exports to Europe accounted for around 26% of total Trinidad LNG exports in 2021, with exports to regional markets in central American, the Caribbean and Latin America being the most important with around 40% of exports. However, Trinidad & Tobago’s Minister of Energy, Stuart Young, recently stated that up to 40% of Trinidad’s LNG exports were delivered to Europe in the first half of 2022; a significant increase.
With falling domestic gas production in Trinidad & Tobago over the past few years, Trinidad’s total LNG exports have been decreasing with LNG production in the first 5 months of 2022 just 57% of the peak production achieved in 2009. While this decline in production means that Trinidad does not have the gas resources immediately available to deliver more gas to Europe, it does mean that there is significant underutilised midstream infrastructure and available LNG gasification facilities available. Unlike other producers, Trinidad does not need to secure significant investment in greenfield processing facilities to make more gas available for delivery to international markets. Train 1 of the Atlantic LNG export facility, with a processing capacity of 3 million tonnes per year of LNG, has been offline since 2020.
This underutilised LNG processing capacity represents a significant opportunity if Trinidad & Tobago could increase its domestic gas production. Major gas producers in Trinidad & Tobago, including Shell, bp and EOG Resources do have projects either in execution or under development that could help shore up falling gas production. However, these projects are unlikely to increase overall production and will just help offset natural reservoir decline. Woodside, who recently acquired the upstream petroleum assets of BHP, are reviewing the development options for the 3.,5 trillion cubic feet of natural gas resources announced for the Calypso Project along with their partner bp, but this gas is unlikely to be available until nearer the end of the decade.
With the constraints on domestic production, the Government of Trinidad & Tobago has been actively exploring the possibility of importing pipeline gas from neighbouring countries to pass through the existing Trinidad infrastructure. In the longer-term gas may be available form Guyana and Suriname, but the most immediate source of natural gas would be from neighbouring Venezuela. Exporting gas from Venezuela to Trinidad by pipeline to put through the Atlantic facility for onward delivery to international markets is, however, constrained by the economic sanctions placed on Venezuela.
With reserves of over 220 trillion cubic feet (tcf) of gas, Venezuela is one of the world’s major sources of gas reserves (in addition to its oil reserves). By contrast, Trinidad & Tobago has just over 10 tcf of gas reserves. Production of natural gas in Venezuela has, however, been severely constrained due to the poor investment climate, the lack of a domestic market and the inability to develop gas projects for export. Despite its significant reserves Venezuela produces less gas than Trinidad & Tobago.
Speaking at various regional and international fora over the past few months, the Trinidad & Tobago Prime Minister, Dr. Keith Rowley and Minister of Energy, Stuart Young, and indeed other CARICOM leaders, including President Mohamed Irfaan Ali of Guyana, have repeatedly pointed out that relaxing the sanctions regime imposed on Venezuela to allow the export of pipeline natural gas to Trinidad would make a significant new source of LNG available to the international markets. Gas provided to the petrochemical sector in Point Lisas could also help provide much needed increases in ammonia, methanol and UAN production.
Stuart Young also recently visited Venezuela and met with President Maduro and other members of the Venezuelan cabinet. While details of the discussions were not made public, the meeting signals the two government’s continued dialogue on issues of mutual concern. While national security is obviously high on the agenda for the two governments, advancing the previous efforts to export gas from Venezuela to Trinidad is a very obvious focus.
If the sanctions were to be removed, gas from Venezuela could come from two major potential sources.
The first potential source is the many shallow- water offshore fields off the Venezuela coast that are close to existing infrastructure in Trinidad & Tobago. The Dragon field, off the northern coast of Venezuela’s Guiria peninsular, is just 17 km from the Shell - operated Hibiscus platform in Trinidad and has sub-sea production infrastructure already installed. A project to deliver this Dragon gas was well advanced before additional sanctions were imposed in the aftermath of the disputed Venezuelan Presidential elections in 2018.
In addition to the Dragon field, there are also many multi- trillion cubic feet gas fields in the Plataforma Deltana region off Venezuela’s largely undeveloped east coast and off the south-east coast of Trinidad. One major field in this region, the Loran-Manatee field, straddles the maritime boundary between Trinidad and Venezuela, with Shell currently progressing plans to develop the reserves on the Trinidad-side of the field (Manatee). The Plataforma Deltana region is close to major gas producing offshore areas in Trinidad, with extensive existing infrastructure in place.
The second potential source of gas from Venezuela is the large volumes of gas associated with current onshore oil production that are currently flared, given the lack of infrastructure and a market for this gas in Venezuela. Venezuela is one of the ten countries which contributes to 75% of the total volume of flared emissions in the word. At present, Venezuela is the 6th largest.
Source: WorldBank Global Gas Flaring Tracker Report 2021
The volumes of flared gas in Venezuela increased under sanctions, as the industry was unable to maintain the equipment that was previously used to reinject gas into oil reservoirs. Instead of being flared, this gas could, in theory, be collected and piped to Trinidad, using the existing onshore gas pipeline network in Venezuela and a new subsea pipeline from Guiria to tie into the Trinidad network. From a global climate change point of view this would be a clear win-win scenario, directly reducing CO2 emissions within Venezuela and making more gas available to offset other higher emitting fossil fuels, in particular the coal-fired electricity generation units currently being brought back online in Europe.
With the continuing demand to offset Russian gas in Europe, the availability of gas in Venezuela and the availability of infrastructure in Trinidad, there are strong geopolitical and economic reasons to revisit the existing sanctions on Venezuela gas exports. Trinidad & Tobago could play a major role in delivering more gas to Europe, but political decisions are needed for this to become a reality.
Note: Data in this article is source from the bp Statistical Review of Energy unless otherwise stated.