Shell is in advanced discussions with the Venezuelan government to develop four major natural gas blocks near Trinidad and Tobago in two of the South American nation's largest offshore gas fields, according to two informed sources.
The London-based energy giant has long sought to advance the Dragon gas field, which holds reserves of 4.2 trillion cubic feet in Venezuelan waters, and could make a final investment decision on this flagship project by the end of this year.
Sources indicate that Shell now aims to incorporate adjacent blocks to expand its operations in the OPEC member country under the interim government of President Delcy Rodriguez.
The company is targeting extraction rights for three gas fields that, together with the Dragon field, form part of the Mariscal Sucre project—a 12 trillion cubic feet reserve located off Venezuela's eastern coast. Additionally, Shell is eyeing the Loran offshore block, which holds 7.3 trillion cubic feet of reserves and is part of a cross-border field extending into Trinidad, bringing the total reserves under consideration to approximately 20 trillion cubic feet.
In March, Shell executives signed a preliminary agreement with the Rodriguez administration in Caracas to advance the Dragon project and potentially develop two highly favored onshore oil and gas fields, Carito and Pirital.
The natural gas is expected to be transported to Trinidad for processing into liquefied natural gas (LNG) for export, providing a significant boost to the shared Atlantic LNG project. This facility has been operating below capacity due to insufficient gas supply.
Shell is already developing the Trinidadian section of the Loran-Manatee gas field. The British company operates the Trinidad side, while U.S. giant Chevron holds interests in the two blocks comprising the Loran field on the Venezuelan side.
Chevron is reportedly relinquishing its interests in these areas as part of an agreement to expand extra-heavy oil projects in Venezuela's Orinoco Belt, the country's main crude-producing region. The Loran block is expected to be re-tendered soon, according to the two sources.
In an email response, Shell stated, "The proximity of the Loran field to the Manatee field makes it an attractive investment opportunity for Shell," confirming its interest in additional areas.
Venezuela's Ministry of Petroleum, state-owned PDVSA, Trinidad and Tobago's Ministry of Energy, and Chevron did not respond to requests for comment.
One individual familiar with the negotiations explained, "The plan involves drilling subsea wells on the Loran side and connecting them back to our Manatee platform in Trinidad once we secure the remainder of the field. It's a straightforward solution that makes developing the entire block feasible for us."
Shell holds a 45% stake in Trinidad's Atlantic LNG project, the largest LNG facility in Latin America. Originally designed with an annual capacity of 15.5 million tons, the plant's output has fallen to 12 million tons due to gas shortages. Data from LSEG shows that the facility shipped less than 9 million tons last year.
Last week, Shell CEO Wael Sawan indicated at the CERAWeek conference in Houston that the company could approve up to two Venezuelan projects this year if fiscal and legal conditions improve.
Sawan remarked, "Our current focus is on where we can add value in Venezuela. Initially, I would say it's more oriented toward gas, particularly gas that can be monetized through LNG."
Trinidad and Shell have been actively seeking to boost domestic gas production and secure supplies from Venezuela, which lies just six miles away at its closest point. The Mariscal Sucre gas fields—Dragon, Rio Caribe, Patao, and Mejillones—are closer to Venezuelan infrastructure than to Trinidad's, and the vast majority of Venezuela's offshore gas reserves remain untapped.
Previously, PDVSA signed agreements granting Russia's Rosneft interests in the Patao and Mejillones fields. Since last year, PDVSA has also been seeking a company to develop Rio Caribe under a production-sharing contract, though it is unclear whether any preliminary agreements have been finalized.
Rosneft's Venezuelan assets were transferred to Russian state-owned Roszarubezhneft in 2020, but these gas fields remain undeveloped. Sources noted that Russian involvement in these areas has complicated efforts to finalize agreements with Shell.
A Shell insider commented, "We are making progress. Yes, the allocation of these fields to Russian companies is an issue, but we will resolve it. I'm confident."
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