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Shell Said to Be Seeking Long-Term Venezuela License

Reuters reports that the Dutch supermajor Shell is seeking a long-term license from Washington before making a final investment decision on Venezuela’s Dragon natural gas project. 

Citing two anonymous sources, Reuters said  Shell was seeking a 15-year license to develop the field, hoping for a positive decision, even further down the road, before investing $1 billion. Currently, there is a two-year license that was issued in January 2023. 

Reuters was unable to obtain comment from Shell, the U.S. Treasury Department or the Venezuelan partners in the project, state-run PDVSA and NGC, the state-run gas company of Trinidad and Tobago.  

The prospect of a revival of sanctions this month after Venezuelan leader Nicolas Maduro has violated sanctions-relief conditions through his persistent attempts to keep the opposition from forming a strong candidate to run in free and fair elections this year. 

Venezuela’s offshore Dragon field is near the country’s maritime border with Trinidad and Tobago and is said to hold up to 4.2 trillion cubic feet of gas, potentially creating a large new export revenue stream for Venezuela, Reuters reports. "Obviously, a two year license has a window and this is a transaction that will take more than two years," Trinidad Energy Minister Stuart Young told Reuters in March on the sidelines of the Houston CERAWeek energy conference. 

Timing becomes an issue with the current license issued in January 2023, with a short extension, expiring in October 2025, which might not be long enough for first gas to be ready to produce, Reuters reported. On Tuesday, a joint venture led by CHevron launched its 2024 drilling campaign putting the drill bit to the first of 17 planned wells with PDVSA in the Orinoco Belt. 

Chevron has U.S. authorization to operate in Venezuela with its joint ventures with PDVSA, while the U.S. Administration also currently allows exports and trade of Venezuelan crude oil under sanctions relief until April 18.

By Charles Kennedy for Oilprice.com

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