By Chris Noon

Venezuela signed a deal with Trinidad and Tobago on Wednesday to jointly produce gas from three highly prospective offshore fields spanning the maritime border between the two countries in the Caribbean Sea.

The news is a boon for Caracas, with initial production from the largest field, the Lorán-Manatee prospect – which holds 10.25 trillion cubic feet (290 billion cubic metres) of resources – to be piped to and sold in Venezuela. The Latin American country will connect the new supply to another flagship project, raising the prospect of future piped and LNG exports.

Venezuelan Oil Minister Rafael Ramirez, who is also the president of state-run PDVSA, signed the deal with Trinidadian Energy Minister Kevin Ramnarine in Caracas.

The deal concludes a process to unitise the gas reserves of the two countries that began in 2007 under former President Hugo Chavez, and the rhetoric between the two countries was warm on Wednesday.

“On a clear day, I can see Venezuela from my office, so you are very close to us physically – and as friends,” said Trinidadian Energy Minister Kevin Ramnarine, in comments broadcast over PDVSA’s radio station.

PDVSA and United States major Chevron will begin work on the field immediately, and the gas will be commercialised within two years, said Ramirez. Venezuela plans to build a 276 km pipeline from Lorán-Manatee to Güiria on the country’s east coast, he added.

This would connect Lorán-Manatee to the delayed Mariscal Sucre gas project in the region, allowing Venezuela to become a gas exporter to neighbouring Colombia by July 2014, said Ramirez. It also raises the possibility of liquefaction trains for LNG exports when production flows increase from both Lorán-Manatee and Mariscal Sucre (see Rosneft: Venezuelan project needs $5 billion, 3 July 2013).

“This is very good news for Venezuela and Trinidad and Tobago,” Carlos Bellorin,a senior petroleum analyst at IHS, told Interfax. “Now the big question is how fast and economically PDVSA and Chevron can develop the reserves of the Loran-Manatee field.”

Long-term focus

The decision to monetise the gas in Venezuela is a sign long-term gas export ambitions could be prevailing over short-term profit in Caracas. Selling the gas to Trinidad would have been cheaper in overall project terms, because Lorán-Manatee is closer to the Caribbean island nation, which has a superior pipeline and liquefaction infrastructure.

Trinidad also has a renewed focus on exploration, as a result of concern its LNG production – the mainstay of its economy – will only be sustainable for around 14 years because of shrinking gas reserves and maturing major fields (see Trinidad banks on unbooked bounty, 7 July 2013).

Venezuela and Trinidad signed an agreement on the Lorán-Manatee field in 2010. However, a territorial dispute prevented installation of extraction facilities on the site.

Venezuela, which owns 73.75% of the prospect, originally wanted to draw on Lorán-Manatee to feed the first train of its proposed Delta Caribe LNG project. Trinidad, which controls the other 26.25%, wanted output from Lorán-Manatee to feed a proposed fifth LNG train dubbed ‘Train X’.

Trinidad has an 84% stake in the smaller Dorado-Kapot field, which contains 8.78 bcm, and 36% of the Cocuina Manakin prospect, which contains 20.96 bcm.

“Ramirez left open the possibility of monetising part of the Venezuelan reserves in Trinidad, but this has to be decided by joint committee formed by representatives of both countries. Trinidad has the experience, business environment and four LNG trains already in operation almost at capacity,” said Bellorin.

“Trinidad has a long-standing project to build Train X, but the feasibility of this project depends on the availability of enough reserves to justify such a highly capital-intensive project. I think monetising the Lorán-Manatee production is without any doubt the most business-minded and fastest option for both countries.”

The agreement with Trinidad offers Venezuela “guaranteed long-term supplies of gas”, Ramirez said. He added Caracas would look to reverse flows in the Antonio Ricaurte pipeline, through which Venezuela imports Colombian gas, by July 2014.

Regional supplier

Antonio Ricaurte, which was inaugurated in 2006, links Colombia’s Caribbean coast to the Venezuelan city of Maracaibo and was intended to transform Venezuela into a regional supplier. Caracas envisaged extending the pipeline as far as Nicaragua by 2012, but the project was delayed because Venezuela lacked the infrastructure and investment to bring its giant offshore discoveries onstream (see Will Latin America ever realise its pipe dreams?, 24 August 2011).

Ramirez said Venezuela would seek to build LNG trains once the extension of the pipeline was completed in late 2015, and that Argentina was a likely customer for any LNG exports. Caracas said in June 2013 that Argentine state-run YPF would join PDVSA and Chevron in the Plataforma Deltana project, where Lorán-Manatee is located.

PDVSA will pursue an agreement with Chevron that includes construction of an LNG plant. Chevron operates and holds a 60% interest in Block 2 and a 100% interest in Block 3 in Plataforma Deltana. Block 2, which was commercialised in March 2010, houses Loran-Manatee, which was scheduled to supply gas for the LNG project. The plant was slated to have an initial export capacity of 4.7 mtpa, but the project has stalled because of Venezuela’s focus on meeting domestic gas demand.

PHOTO: Trinidad’s Energy Minister Kevin Ramnarine (left) with his Venezuelan counterpart. (Ministry of Energy & Energy Affairs)