Venezuelan President Nicolás Maduro hosted Trinidadian Energy Minister Stuart Richard Young on Wednesday at Miraflores Palace. Young co-signed the deal with Venezuelan Oil Minister Pedro Tellechea in a televised press conference.
The two nations, through their respective state-owned companies Petróleos de Venezuela (PDVSA) and National Gas Company (NGC), will explore offshore natural gas at the Dragon field, located in Venezuelan waters.
“Today’s deal and the project to jointly produce and sell gas is a message of cooperation, solidarity and shared sovereignty,” Maduro said. “It is a message of peace for the whole Caribbean.”
With 4.2 trillion cubic feet (tcf) Dragon of gas reserves, the shared project that will be operated by Shell could help Venezuela shore up its domestic supply. For its part, Trinidad would be well-positioned to increase exports to other Caribbean markets.
In January, the Keith Rowley government received a two-year license from the US Treasury Department to negotiate natural gas initiatives with its Venezuelan counterpart. Though no US entities are involved in the project, companies and governments request a green light from Washington to avoid being slapped with secondary sanctions.
The Caracas-Port of Spain negotiations stalled due to US demands that Venezuela receive no cash from the deal. Maduro labeled the impositions as “colonial” in nature.
The details of the signed agreement have not been made public, though several outlets reported that Rowley had lobbied US officials to soften the demand and that PDVSA was open to receiving part of the payment in cash and part in kind, for example via food shipments.
Talks likewise progressed after Shell and the NGC agreed to credit PDVSA for a US $1 billion investment in a pipeline connecting the field to the Venezuelan shore.
The Venezuelan president praised Trinidad for the “solidarity” and vowed to continue deepening cooperation. Maduro mentioned the reactivation of the Loran-Manatee joint project as the next step to be evaluated. The offshore Loran-Manatee field contains an estimated 10 tcf of natural gas. Venezuela owns 73.75 percent of the reserves and Trinidad the remaining 26.25 percent.
Maduro went on to reiterate Venezuela’s openness to foreign investment in natural gas projects in what he termed as “win-win arrangements.” The South American nation currently holds the world’s eighth-largest reserves which have gone largely unexplored. Venezuelan legislation demands that PDVSA be the majority stakeholder in oil projects, but there is no such constraint on natural gas, offering multinational corporations better prospects and reduced exposure to US sanctions.
In the wake of a high-profile visit to China, the Venezuelan president claimed that Chinese companies are bringing “significant investments and technology” to produce natural gas in Venezuela.
In contrast to the closer ties with the Caribbean island, Venezuela denounced its eastern neighbor Guyana for launching an auction of offshore oil blocks in the territorial waters of the disputed Essequibo Strip.
“The Guyana government is not sovereign over this maritime area, and thus its actions violate international law,” read a September 19 statement issued by the Venezuelan Foreign Ministry.
In a separate communique, Caracas accused Georgetown of acting as “an employee of ExxonMobil,” in reference to the US oil giant that has leading oil drilling projects in Guyana.
In response, Guyanese President Irfaan Ali issued a written statement rejecting the Venezuelan claims and stressing that his country had the right to “pursue economic development activities in any portion of its sovereign territory.”
Ali also received immediate backing from the US government, with Assistant Secretary for Western Hemisphere Affairs Brian Nichols stating that Washington supported Guyana’s “sovereign right to develop its own natural resources.” Venezuela reacted swiftly with another press release, blasting the US’ “opportunistic and meddling stance.”
The latest issue surrounding the Essequibo controversy hogged headlines in Venezuela, with high-profile figures across the political spectrum backing the country’s purported sovereignty over the 160,000 square kilometer strip. The Venezuelan National Assembly approved an urgent motion to propose a non-binding referendum to consult public opinion over the defense of the country’s territorial claim.
The sparsely populated, resource-rich Essequibo Strip is one of the world’s longest-standing border disputes. Guyana has requested that the International Court of Justice (ICJ) uphold the validity of the ruling issued by a Paris Arbitration Tribunal in 1899 which attributed the territory to the United Kingdom, Guyana’s colonizer at the time.
For its part, Venezuela rejects the 1899 settlement as fraudulent due to the absence of Venezuelan representatives. Instead, it argues that the area belonged to Spain at the time of the country’s independence. Caracas likewise points to the 1966 Geneva Agreement where both countries committed to finding an amicable solution as superseding the 1899 ruling.
The ICJ dismissed Venezuela’s objections and ruled that it has jurisdiction to weigh on the dispute. Despite rejecting the Hague-based court’s authority, the Maduro government will present its “Counter-Memorial” to sustain its position.
On Saturday, President Maduro called on his Guyanese counterpart to hold a meeting to reinstate the Geneva Agreement, with mediation from the Caribbean Community (CARICOM).