Global Insight Perspective | |
Significance | Venezuela and Trinidad and Tobago have signed a treaty that the Trinidadian Prime Minister has described as the first unitising agreement in the Western Hemisphere. |
Implications | The agreement is significant as the development of some fields in Venezuela's offshore Deltana Platform will become more attractive if reserves on both sides of the maritime boundary are treated as a single unit. |
Outlook | Although more details may still have to be worked out, in principle, the agreement could allow Venezuela to begin gas exports prior to building a LNG facility of its own. |
Venezuela and Trinidad and Tobago Sign Treaty Delineating Gas Reserves
Venezuela's President Hugo Chávez and the Prime Minister of Trinidad and Tobago Patrick Manning on Tuesday signed a treaty on the unification of gas reserves that straddle the maritime border between their countries. Discussions between the two countries over the issue have been ongoing since 2003 when they signed a memorandum of understanding (MoU) on jointly developing the natural gas reserves along their maritime border (see Venezuela: 13 August 2003: Venezuela and Trinidad Sign MOU to Jointly Develop Cross-Border Gas Reserves). The 2003 MoU anticipated the possibility of processing some Venezuelan gas at the Atlantic LNG plant in Trinidad and Tobago, while Venezuela built its own LNG facility and this may now become a reality.
Although few details were released, earlier reports had indicated that the two countries have agreed in principle to split reserves in the Loran-Manatee field, with almost 75% of the 10 Tcf of natural gas reserves thought to lie in the field assigned to Venezuela, and the remainder to Trinidad and Tobago (see Trinidad and Tobago: 19 February 2007: Trinidad and Tobago and Venezuela Agree to Division of Gas Reserves in Loran Field). The Loran field is in Block 2 in the Deltana platform in the Atlantic Ocean. Chevron was awarded a contract for the block by the Venezuelan government in 2003. Meanwhile, Chevron operates an extension of the Loran field—the Manatee prospect in Block 6(d) in Trinidad and Tobago—in partnership with BG.
According to a report in The Trinidad Guardian, Prime Minister Patrick Manning said on his return home from Venezuela that gas produced from the Loran-Manatee field would form the basis for a fifth train at the Atlantic LNG plant and ensure that Jamaica is able to receive 160 MMcf/d for the expansion of aluminium production in the country.
Outlook and Implications
An agreement on unitising cross-border gas reserves is considered crucial for the development of Venezuela's offshore Deltana Platform, close to the country's maritime boundary with Trinidad and Tobago. The Deltana Platform is thought to hold 38,000 Bcf of natural gas reserves on the Venezuelan side and a further 31,000 Bcf on the Trinidadian side. The possibility of treating gas reservoirs that stretch across the border as a single unit would particularly appeal to companies already operating fields in both Trinidadian and Venezuelan waters, as it would help reduce their costs as well as some of the legal uncertainties.
Trinidad and Tobago is also hopeful that the unitisation of reserves will enable it to honour its existing commitment signed in 2004 to export LNG to Jamaica from 2009, which it is unable to do with Trinidadian gas because of insufficient supplies. The stalling of that deal has caused diplomatic tensions between both countries. Venezuela came to Jamaica's rescue by signing an MoU to supply 2.5 million tonnes of gas per year from 2009, but, given that Venezuela does not currently produce enough gas to meet its own needs and has no infrastructure in place to export LNG, some have questioned the feasibility of that deal. Processing Venezuelan gas in Trinidad and Tobago prior to its export to Jamaica is maybe the way for both Trinidad and Tobago and Venezuela to keep their pledges to supply gas to Jamaica.