Venezuela agrees to send gas to Trinidad, sign MOU Tuesday

Aug. 11, 2003
For the first time, Venezuela has agreed to allow some of its natural gas to be processed in Trinidad and Tobago as both countries jointly move to develop their cross-border reserves with the signing of a Memorandum Of Understanding planned for Tuesday.

By Curtis Williams
OGJ Correspondent

PORT OF SPAIN, Aug. 11 -- For the first time, Venezuela has agreed to allow some of its natural gas to be processed in Trinidad and Tobago as both countries jointly move to develop their cross-border reserves with the signing of a Memorandum Of Understanding planned for Tuesday.

Venezuela's President Hugo Chávez made the announcement in Trinidad's capital, Port of Spain, last weekend when he visited the Caribbean Island, telling a news conference that his country was willing to have some of its gas processed by its neighbor until Venezuela could build its own LNG plant.

Chávez said Venezuela was still committed to the construction of the $2.7 billion, 4.7 million tonne Mariscal Sucre LNG plant in the port city of Guiria but was aware that constructing it would take some time.

"During discussions with the government of Trinidad and Tobago," he said, "we indicated that we were committed to work together in carrying out several projects. We are about to build in Guiria an LNG plant (that) would use gas from the Plataforma Deltana area." Originally, construction on the LNG plant was slated to begin in 2005, with exports expected to start in 2007 and the gas to come from Norte de Paria fields off Venezuela's northeastern coast. (OGJ Online, June 19, 2002).

"Several international companies have shown significant interest in the project," Chávez continued, "and we are confident that it will be built in time." In the meantime, he said it is feasible to send gas from the Plataforma Deltana area to Trinidad to be processed in its Atlantic LNG plant, because it already is in operation.

Trinidad and Tobago—the world's fifth largest exporter of LNG—announced 2 months ago the construction of a fourth LNG train. The Caribbean island has been pushing for Venezuela to allow some of its gas to be processed in Trinidad and Tobago so it could continue to expand the LNG program. The Island nation is only 7 miles from Venezuela, and several massive gas fields straddle both maritime borders.

Unitizing blocks
The signing of the MOU is expected to set the framework both for technical appraisals of the reserves and the face-to-face negotiations that are to take place. Three major fields are to be unitized including Block 1, where Venezuela's Petroleos de Venezuela SA last year drilled the Dorado I well and is said to have confirmed 1.5 tcf of natural gas (OGJ Online, Mar. 25, 2003). And on the Trinidad side, massive Kapok field, operated by BP PLC group unit BP Trinidad & Tobago LLC (BPTT), is believed to have more than 3.5 tcf of gas.

Sources in the Venezuelan government say that the Chávez regime was willing to have gas from Block 1 sent to Trinidad and Tobago because of the significant infrastructure already in place in Kapok field and that it already has begun discussions with BPTT on the matter.

In addition, Block 2 on the Venezuelan side where the Loran well was drilled in 1982 is to be unitized with Block 6d on the Trinidad side of the border.

British Gas PLC is operator of Block 6d and, along with partner ChevronTexaco Corp., was offered Block 2 by the Venezuelan government but eventually withdrew, leaving ChevronTexaco and its new partner ConocoPhillips to develop it. It is believed that 4 tcf of gas straddle both blocks. Last month ChevronTexaco announced it would spend just over $2.1 billion developing Block 2.

The third block to be unitized is Block 4 on the Venezuelan side, where PDVSA had drilled the Coquina well in 1983, discovering shallow cross-border gas reserves. This is matched on the Trinidad and Tobago side by BPTT's Manikin I discovery in 5b, which identified 2 tcf of gas in both shallow and deeper reserves.

Seeking agreements
Both governments, however, have indicated that they first will have to reach a government-to-government agreement before the international companies can fully develop the fields.

Chávez said he was committed to working with Trinidad and Tobago to jointly develop both countries shared resources.

He reminded the news conference that he is grateful that Trinidad and Tobago helped his government survive the recent national strike that crippled his country's oil industry. Chávez said the 500,000 bbl of gasoline shipped from Trinidad and Tobago during the height of the strike especially resuscitated his country. As a result, Chávez renewed his government's offer to give Trinidad and Tobago's state-owned oil and gas company Petroleum Co. of Trinidad & Tobago Ltd. a share of the reserves in the Plataforma Deltana area.

Trinidad and Tobago's Energy Minister Eric Williams said his government was very interested in the offer and he would hold further discussions when he meets in Caracas on Tuesday with Venezuela's Energy and Mines Minister, Rafael Ramirez.

"We are very, very interested in the possibility of participating in the Plataforma Deltana area," he said. "Of course the precise offer has not been shaped and so when that comes we will further study it. But I can tell you we are excited at the possibilities."