step for gas reserves
agreement between T&T and Venezuela on the division
of the natural gas reserves in the Loran block, which straddles
the narrow maritime area between the two countries, is a
big step in the relationship between this country and its
The agreement still needs to be signed and ratified by the
respective governmentsa process which hopefully will
not be protracted given the importance of natural gas to
this countrys economy.
The road to greater cross-border collaboration between the
two countries began with the signing of the Memorandum of
Understanding on the unitisation of the natural
gas reserves in August 2003.
The MOU set the procedural framework for quantifying and
allocating the gas located in the cross-border fields.
A statement from Venezuelas Ministry of Energy 12
days ago indicated that a technical committee comprising
representatives from both countries determined that the
Loran field has reserves of about ten trillion cubic feet
of natural gas.
There was also agreement that about 25 per cent of the reserves
in the Loran field would belong to T&T while Venezuela
would be entitled to about 75 per cent of the reserves.
From a T&T perspective, the agreement on the allocation
of the natural gas reserves in the Loran field is extremely
significant. It will eventually mean the addition of an
estimated 2.5 trillion cubic feet of gas to the countrys
The agreement comes at a time when T&Ts natural
gas reserves are in a state of decline as a result the recent
failure by foreign energy companies operating in Trinidad
waters to discover the next big new natural
The agreement, therefore, should go a long way in allaying
the fears of some energy experts about the decline in the
countrys natural gas reserves.
One option for using the gas in the Loran field would be
to transport it to the liquefied natural gas (LNG) complex
in Point Fortin.
Despite its best efforts, Venezuela has not been able to
develop an LNG industry in the last 20 years while this
country already has four producing LNG facilities.
Because Venezuela and T&T have decided to divide the
Loran reserves in a 75/25 split, it may be possible to replicate
the Atlantic LNG Train 1 model in which the suppliers of
natural gas (bpTT and British Gas) were the largest shareholders.
It should not be beyond the capability of this countrys
diplomats and energy technocrats to fashion a joint-venture
company which brings together Venezuelan and T&T interests
along with energy companies not currently involved in the
liquefaction at Point Fortin.
These companies could build a fifth liquefaction facility
at the LNG complex at Point Fortin. While this facility
is still being called Train X because of the uncertainty
surrounding it, Prime Minister Patrick Manning and Energy
Minister Lenny Saith have indicated that they want the equity
in the facility to be reflective of the diversity in the
countrys energy sector.
Such a joint venture would require further serious commercial
negotiations between the two countries and their representative
The development of a jointly-owned LNG facility would go
a long way to deepening the relationship between T&T
and Venezuela. Many feel this relationship is not as warm
at the government-to-government level as it used to be after
T&T decided to stay out of Chavezs Petro Caribe
But as these proposed negotiations will come against the
backdrop of the threatened nationalisation of foreign oil
assets in Venezuela, T&T may have to engage in some
extremely delicate financial diplomacy in order to assuage
foreign investors while adding to the countrys natural