Category Archives: lng/energy analysis

Dragon Gas or Rosneft Venezuelan Gas? Dragon Dance bruk yuh waist

Dragon Dance: Game, Set and Match

Whilst T&T corporate media was force feeding us our daily dose of the victims of regime change and their registration in T&T developments in Russia concerning the Mariscal Sucre project was not reported in T&T. The Dragon gas field is part of the Mariscal Sucre project as are the blocks Patao and Mejillones with possibly much larger deposits of gas than Dragon. In 2009 the Russian state owned corporation Rosneft signed on to exploit Patao and Mejillones blocks and in spite of handing over USD 6,000 million to the Venezuelan government as advance payment for oil shipments, Rosneft has done nothing in both Mariscal Blocks. On 13 June 2019 Russia announced that President Putin had finally approved the Rosneft development plan for both offshore gas blocks apparently ending the stasis. The Russian report revealed that Rosneft under the Putin approved plan will have 100% control of both blocks and has the option to export 100% of the gas produced from both blocks. This means that PDVSA will not be involved in the development and exploitation of Patao and Mejillones as dominant shareholder will control in the hands of Rosneft and Russia. With development of both fields Trinidad and Tobago now has the option to purchase Patao and Mejillones gas especially for the petrochemical sector currently long suffering under gas curtailment since 2010. But can we purchase Venezuelan gas from Rosneft without incurring the wrath of Washington’s regime change agenda which survives even if Trump departs in 2020. But what of Dragon and Dragon gas? Dragon is part of PDVSA which is presently showing all the advanced signs of spreading rigor mortis where the only unit presently capable of raising oil production sustainably is Petrolero Sinovensa as the Chinese have now assumed control of daily management as they want their oil that they paid for with cash in advance. The Russians are applying the pressure as they also want their oil which they paid for in advance but PDVSA is in fact a basket case. Quite simply PDSA does not have the money or the wherewithal to launch and complete the Dragon gas pipeline and other works. Maduro has now to dance with Russia and China as they are his only strategic allies on the firing line putting out for him. T&T what have you done for me lately? So Rosneft develops the two blocks and Venezuela earns revenue as rentier state from the sale of gas whilst I keep my benefactor happy.

Russia applied the pressure with the clear intent to get what they wanted and apparently the terms and conditions of the development of Patao and Mejillones will establish Rosneft and Russia as an energy exporter in the Latin American underbelly of the USA. Russia is factoring its input of military expertise to the FANB at this juncture of the US regime change exercise for Venezuela to establish its operational presence in the Venezuelan energy sector as an exporter of Venezuelan energy. Putin’s announcement on the 13 June 2019 before Maduro’s trip to Moscow was strategically timed for maximum effect in the ongoing cold war with the USA.

The lesson for T&T out of this is that you cannot keep in good graces with the Washington regime change agenda whilst seeking favours from the target of regime change. You failed to erase the free entry of Venezuelans in a timely manner especially following the events of Maduro’s first election as president. Then the Dragon dance commenced and sucking up for a favour as the deliberate targeting of T&T as a human smuggling destination for Venezuelans was covered over with delusion and denial. This chronic delusion easily facilitated the emergence of a viable organised crime smuggling operation utilizing all the existing smuggling and landing routes. Now as the loads of smuggled humans continue to land on our shore in spite of the end of amnesty we get the news on the 14 June 2019 that Rosneft got what it always wanted from Maduro on the last day of registration of illicit Venezuelan migrants. We danced the Dragon dance and lost because in our delusion we refused to accept the reality that we were boxing way out of our weight class and we were played with nothing to show for it but migrants straining the very fabric of the living condition of the poorest sections of our national population. Maduro 2 T&T 0. And as we devote scarce resources to police the smuggling boats and the illicit migrants, gangland will fully exploit the spaces created with a national security apparatus stretched to the core. The lesson is there are few persons in life more afflicted with delusion as politicians and economic migrants as both believe only in manufactured reality so engrossed are they with “I.”

Petrotrin Corporate Bonds, Geopolitics and the Political Impact to 2020

The Corporate Bonds of Petrotrin and the Risks to the T&T Budget

On August 14, 2019 the corporate bond of Petrotrin for USD 850 million is due to be repaid in full. Petrotrin cannot pay this bill of USD 850 million and the Government of T&T has repeatedly stated in public that it cannot pay the sum due on August 14, 2019. If true, then there are two possible alternatives: enter into negotiations with the bond holders to refinance the debt thereby pushing repayment further down the road. Or to default on the debt and suffer the collapse of our credit rating thereby entering the dance hall where Argentina is and simply cannot get out of where we will do the Hotel California tango. But you cannot simply summon the bond holders tell them what you want and they sign on the dotted line and walk away. It does not work so in neoliberal financial markets capitalism as you have to pay your pound of flesh for the favour granted and there is a geopolitical play to it where they can and have brought their political partners in government and in the multilateral lending institutions of the North Atlantic to the negotiations where they are the 800 pound gorillas in the room. And then there are the vulture funds who buy the bonds cheap, cheap from those fleeing the risk of or the default and then sue the entity issuing the bond in a US court winning control over the entity which they then foreclose on and dispose of as they see fit and this process applies to suing the government of the day. Now you understand why Maduro has the masses of Venezuela on the Maduro diet whilst he honours the corporate bonds of PDVSA as they come due without fail. The corporate bond holders of Petrotrin were sending messages to Petrotrin long before the board of the company announced its decision to close the refinery and have since kept sending messages.

Before they were sending the message that the company cannot pay off the bond due in 2019 and the government will have to pay it off for the company. This was reflected in the lowering of the credit rating to BB- and the fall in the price of the bond on the market and the consequent rise in the yield. With the announcement of the board and all that has been aired in the public domain since, the bond price continues to fall and the bond holders are now insisting that refinancing is only possible with a government guarantee of the USD 850 million debt (from 10.3% to 11.9% as at August 30, 2019 to 19.78% at September 16, 2018). The bond market has now therefore indicated its overwhelming suspicion of the feasibility of the board’s turnaround plan for Petrotrin, to be kind, and the feasibility of receiving their bullet payment in 2019.  Petrotrin and the government cannot force the bond holders to accept a refinanced bond there must be mutual agreement as Petrotrin agreed to the terms and condition of the contract in return for USD 850 million. At this point in the negotiations the 800 pound gorillas in the room wake up and can now pursue a geopolitical agenda for they have you by the short and curly and we then do the Dragon dance. To guarantee USD 850 million in government external debt we, T&T will add this debt to our external debt stock and guarantee its servicing as the interest and principal come due. And it is highly likely we will have to do the same with the 2022 bond of USD 750 million which means all told some USD 1.6 billion to the T&T external debt stock. The demand for a government guarantee confirms the expressed position that the grand plans announced by the board are not convincing bond holders that a new oil company can in fact generate the necessary cash flow to service the huge debt load the board says will be placed on it to erase the bond of 2019 and be in business to do so in 2022 plus other debt placed on it from Petrotrin. The board chairman should stick to assembling corn flakes. What happens when the 800 pound gorillas in the room now question the fiscal and monetary policies of the government in light of continuing deficit spending and an overvalued TT dollar in light of this added debt load? Remember Mia and Andrew? Then at this point do the Dragon dance!

Sunday Express 16 September 2018 pg. 13 “Govt bond trades at big premium”

October 1, 2018

On 25 September 2018 a report from Moody was published which announced that the rating agency was reviewing the B1 corporate rating and that of its senior unsecured debt of Petrotrin for downgrade. Moody stated that the lack of clarity on the new business profile and strategy announced by the board of Petrotrin in light of the approaching maturity of corporate  debt in 2019 and 2022 was the reason for the review to downgrade. The Moody’s statement insisted that Petrotrin is a very small producer of oil and there is nothing forthcoming from the board of Petrotrin that this very small producer comparatively can in fact generate the required cash flow to  service its debt load whilst ensuring a sustainable business enterprise exists. Moody has then with this statement voted with its feet on the efficacy of the board of Petrotrin charged with creating this brand new Petrotrin as an investment grade entity.On the 27 September 2018 the Prime Minister stated in a campaign meeting for the internal elections of the PNM that the government of T&T will borrow USD 850 million as government debt to pay off the USD 850 million in corporate debt owed by Petrotrin due in August 2019. There will be no attempt to refinance the  debt and place it on the new Petrotrin to service. That bravado has now surrendered to global reality as the message from  external is get real. The squeeze is on!

Dragon gas, Geopolitics and Unanswered Questions: The Threat Horizon to T&T

Denial, Delusion and Dragon Gas

The level of denial and delusion plaguing the public discourse of the signing of a term sheet at Miraflores in Caracas on August 25, 2018 reflects the grave economic threats to the existing structure of the energy economy and its potential blowback on the nation of Trinidad and Tobago that are now finally in the public domain. The core reality nobody mouthing off in public on the Dragon gas supply deal intends or wants to deal with is the ability of Venezuela to comply with the contract yet to be signed especially the ability to erect the pipeline infrastructure to deliver the gas to the border with T&T.

Reality 1: The Maduro regime is the reason why the Venezuelan national system of production has collapsed and when combined with printing money like if it is a comic strip the wind sown is now the whirlwind that is endemic hyperinflation which now has a life of its own. Maduro and his regime has showed no competence in taming the beast they unleashed on Venezuela Sovereign Bolivar, Petro and all. For no matter how many times he raises the minimum wage rate hyperinflation erodes buying power where you are working but barely staving off hunger and those who are not working are indigent.

Reality 2: The Chavista movement who marshalled 6 million votes for Maduro in the May 2018 election made it abundantly clear that this was the last dance and he must now deliver. The Chavista movement is mobilising and with no change for the better only for the worse will move on Maduro and he will make the expected response to unleash the FANB on the Chavistas triggering the civil war. The US and the oligarchs will exploit this Chavista revolution to move both warring factions and put in place the return to the Punto Fijo oligarchy which will deepen the civil war into the destruction of the social order where Venezuela as a nation, a geographic expression and a hegemonic State will cease to exist. The present reality of Nicaragua gives just a glimpse of what is next for Venezuela.

Reality 3: Maduro and his crew are now increasingly indicating to the Chavista Movement that in their desperation to hold on to power at all costs they are now practising, willing Chavista revisionists and apostates. In the signing ceremony of the term sheet for Dragon gas Maduro is reported as calling on Shell to invest in Venezuela’s oil and gas resources and an agreement was signed with Shell International on the Dragon gas August 25, 2018 occasion for Shell providing services to PDVSA in the oil industry. What must be noted is that there was just one report in the Maduro line Chavista news outlet on the Saturday 25 August 2018 event and in that report in Correo del Orinoco what Maduro said was not reported in detail at the event and there was no report on the contract signed between Shell and PDVSA at the event. Given the history of Shell, the proposed LNG plant in Sucre state utilising Mariscal Sucre gas and Chavez Maduro is now in deep apostasy hence the reason why the details of the Dragon gas supply infrastructure and the role of Shell remains a secret both in Venezuela and T&T. Why is Shell presently in Venezuela selling services to PDVSA in the oil industry in Monagas when every major player in the oil services industry both local and international have been burned by PDVSA? Given the drastic and destructive fall in oil production Shell is now indicating that it is now acting out a gambit in Venezuela. To what end?

Reality 4: PDVSA and Maduro simply does not have the money to erect the infrastructure to move Dragon gas to the border with T&T. This investment to move and sell just 150 million standard cubic feet of gas per day can be better invested in raising the daily oil production which is presently struggling to reach 1 million barrels per day on a sustainable basis. Is Shell then building the entire pipeline from the Dragon platform in Venezuelan waters to the Hibiscus platform in T&T waters? If so, WHY? If this is the reality, then it has to redound to the benefit of the bottom line of Shell and to do this there must be greater volumes of Venezuelan gas flowing to Atlantic to increase the volume of LNG Shell reaps to sell on the world market. Shell has publicly indicated its desire to be the hegemonic LNG trader on the world market and to do this it has to increase its output of LNG in the West. Shell can then be playing a long term gambit in Venezuela to get its hands on offshore gas for transport to T&T. Quite a risky gambit given the reality of Venezuela. The best outcome for Maduro is to transport Mariscal Sucre gas to Atlantic for processing to LNG and then sharing in the proceeds of its sale. Is this realisable? Can he sell this apostasy in the reality of Venezuela given his track record of dismal failure? Let him try for the reality will then be on the streets allowing us in T&T to finally get the full picture. The fundamental reality is if this gambit is realised then T&T becomes a colony of Venezuela with the Armada anchored in the Gulf to protect Venezuela’s national interests. This will then play into the strategy to marginalise a very close neighbour to the East which is considered in Chavista discourse a FOL for the US in its war on Venezuela. This Chavista position was illustrated in the manner the press core from T&T was treated at Miraflores during the signing ceremony. Simply another victory for Maduro who considers himself the premier foreign minister of the Chavista revolution and in the history of Venezuela. The carefully stage managed affair of 25 August 2018 was the message to the Chavistas that under his astute leadership the threat to the East was now manageable as they are begging with their tongues on the ground for our Chavista gas and they are in play so don’t worry about the details the revolution is in ascendency. That is Maduro’s gambit and T&T is being squeezed between a series of gambits that care nothing about our future wellbeing especially in light of the crisis at Petrotrin.

Will Shell purchase Rosneft’s interests in the other blocks of the Mariscal Sucre fields to facilitate the extraction of Venezuelan gas to be sent to Atlantic thereby sharing the proceeds with Maduro? Is Shell purchasing from PDVSA the full load of gas from Dragon shunting its share to Atlantic and selling the rest to NGC? The owner of the cricket gear controls the cricket game and can never be given out. We need answers!

Reality 5: The message from CORPOVEX to the exporters of T&T who fell for the three card hustle that is perpetuated on suppliers the world over is that no agreement is sacred and enforceable in Venezuela. Most of all this is a message for the T&T government who are speaking in public as if an agreement with Maduro’s Venezuela is inviolate and sacred when in fact it is expendable in the mad scramble for political survival. Cut up, rip off and stab in the back are the order of the day just listen to the farmers of Venezuela created by the Revolution who must buy seeds from Agropatria imported by Corpovex and the devastation unleashed on them by State bureaucratic capitalism that is now legal banditry. The state public transport buses are parked up in Venezuela for lack of tyres now you know why. Those exporters waiting for your outstanding 20% of the invoice amount just forget that for it is the tax levied for doing business with Maduro’s Venezuela. CORPOVEX is part of the Maduro dance where you dig holes to fill holes and those willing to stay in the dance are now getting less and less gravely intensifying the crisis. There are now reports that allege that Maduro is defaulting on his commitments to his very small group of allies as China and Russia whilst we rush into the Maduro dance where we are dancing alone with no music and the dancehall landlord with a bailiff and police ready to close down the dance, evict everybody and seize the premises. This willingness illustrates the depth of the crisis facing T&T presently.

Reality 6: There is a geopolitical price to pay for being a willing participant of the Maduro gas dance and one potent entry point for the backlash is the over USD 800 million bubble payment due on the Petrotrin debt in 2019. Closing down the refinery and placing a significant number of workers on the breadline can in this geopolitical game be insufficient raw meat for the dogs of war. For the dogs of war can demand the application of a deep austerity package to government expenditure in order to qualify for what we seek. Accept the terms, default on the debt or pay the debt when due such is the nature of the game. What then do we surrender in order to evade the hardball? The party now start! So much for being sovereign! Those who looking for a miracle from Maduro to offer a lifeline to the refinery for toeing the Maduro line remember Maduro don’t even have the daily oil production to satisfy his commitments to his closest allies and note carefully what has happened to the Isla refinery in Curacao under the control of PDVSA. On all sides denial and delusion!

“Manufacturers unpaid for Venezuelan exports-TTMA” Raphael John-Lall Trinidad & Tobago Guardian 25 August 2018

Trinidad and Tobago: Do the Dragon Dance! Do the Maduro Dragon Gas dance!

Trinidad and Tobago: Do the Dragon Dance! Do the Maduro Dragon Gas dance!

It is noteworthy to effect a comparative analysis of the press releases of the governments of Venezuela and Trinidad and Tobago (T&T) on the sourcing of gas from the Dragon field, Sucre State, Venezuela for use in T&T. The latest instance is the negotiations that were held in Caracas, Venezuela in June 2018 which failed to produce a done deal. PDVSA’s press release on Thursday 28 June 2018 in Spanish simply stated in a single paragraph that this was simply another meeting held between both governments towards guaranteeing a supply of gas to the domestic market of T&T and “as well as the plans for gas trading in foreign markets.” What does that mean we the people of T&T simply don’t know! Apparently the Venezuelans are differentiating between gas for domestic consumption and Venezuelan gas turned into LNG and exported to foreign markets. Does this apply to methanol, urea and other products utilising gas as feedstock and exported to international markets? No answers! The press release of Thursday 28 June 2018 in English stated: “as well as the plans for gas trading in foreign markets.” That was all PDVSA’s releases stated simply the process is ongoing with no time frame for finality in sight.

In T&T the Daily Express of 28 July 2018 reported on a press statement from the Office of the Prime Minister (OPM) on the meeting in Caracas, Venezuela which stated that: “There remains a number of areas where further work is required.” The Newsday 29 June 2018 reported on the post cabinet meeting where Minister Young stated: “Right now we’re just stuck on price.” What we can surmise from the public statements made by both sides is that the Venezuelans are demanding a unit price for their gas which will be used as feedstock for export commodities sold on international markets as and especially LNG that T&T is unwilling to pay. Maduro has T&T by the short and curly magnified by the geopolitical reality impacting this gas supply deal. Maduro has everything to gain especially leverage over T&T and we have everything to lose which trumps what we delusionally believe we have to gain.

Can Maduro supply the gas? In light of the condition PDVSA is in as at July 2018 NO! After his electoral victory in May Maduro suddenly became very proactive after a first term of handwringing whilst austere neoliberalism is applied with a vengeance combined with prolific printing of paper money, intense State suppression of the poor and underclass and looting the State coffers on an industrial scale. The Maduro sorcerer’s apprentice model of survival at all costs political alchemy. One such proactive action was to meet with the leaders of the workers’ movement of PDVSA in a televised meeting to hear the workers’ position on why oil production in PDVSA had now collapsed to below 1.1 million barrels per day since April 2018 from 2.5 million barrels per day in late 2016 and how to raise production levels. Oil worker Ernesto Guerra stated: “We can recuperate up to 80% of lost production within six months to a year…if we are given the tools, materials, supplies and, minimal things which we need.” Guerra has therefore indicated that the dramatic fall in production is an expression of the systematic collapse of PDVSA as a wealth generating enterprise under the leadership of Maduro. Other workers indicated that the plant and equipment of PDVSA needs to be upgraded which illustrates the failure to invest in the necessary upgrades and the bureaucratic barriers erected must be dismantled. PDVSA is then a lumbering political dinosaur effectively neutered and plundered as a feeding trough to the point where what is necessary to breathe life into it is outside of the capacity of the politicians who contributed to its demise. PDVSA today simply does not command the resources to develop the Dragon and other gas fields of offshore Sucre state and much less to erect the infrastructure to connect to the infrastructure on the T&T side of the sea boundary. To do this they need an external source of funding in order to meet the start-up of supply date being bandied about in the media. The question is if this legal and permissible under the organic hydrocarbon law of Venezuela?

The immediate strategic imperative is to raise PDVSA’s daily oil production by 1 million barrels per day as follows: 360,000 barrels per day of light crude from 13, 345 category 11 wells in Western Venezuela and 700,000 barrels per day of heavy crude from 9,500 wells from the Orinoco Belt. This strategic imperative has to be implemented on the ground where PDVSA is in the grips of a severe cash flow crisis, is owing its service providers both locally and internationally, faced with debilitating US sanctions especially those which preclude the repatriation of CITGO’s profits to Venezuela and most importantly with a crushing USD debt load in 2018 and 2019. To this must be added the collapse of the infrastructure of PDVSA and in depth politicisation of the management of PDVSA where it is now paralysed from top to bottom exemplified in the assault on corruption where a general of the Guardia Nacional is now president of PDVSA and minister of energy. On the 4 July 2018 Correo del Orinoco carried a news report which indicated that China had agreed to a specific financing credit facility of USD 5 billion to fund the project to raise the production of oil in Venezuela especially in the Orinoco oil belt. The Development Bank of China has also agreed to a specific financing credit facility to PDVSA to increase oil production of USD 250 million. Trump’s war on China leaves little free space for China to secure a supply of oil free from the machinations of the US hence the dance with a collapsed PDVSA. Two press releases of PDVSA dated the 5 and 6 July 2018 indicated that the capital injection of China into oil production will be aimed at increasing oil production in China/Venezuela joint venture companies where the CNPC of China will take on the leading role for China in this China financed venture. China has no presence in the Dragon field and has yet to exhibit concern with Venezuelan offshore gas as an investable interest and the other fields adjoining Dragon are under a joint venture with Rosneft of Russia.

The Correo del Orinoco of 3 July 2018 reported that Gazprom was now working with PDVSA in Zulia State to restore a reliable supply of electricity and steam to the oilfields of Zulia necessary to increasing production via reliable secondary lift. China and Russia are then active in the effort to increase oil production in Venezuela today in the face of the collapse in oil production of PDVSA. An involvement that is a strategic imperative in response to the Trump end game that only Trump seems to know. A press release from PDVSA dated 4 July 2018 reported that 11 service agreements with nine service companies were signed for work on wells in the oilfields of Western Venezuela in Zulia and Trujillo States. The identity of the nine companies were not revealed in the press release but it is clearly apparent that the increase in oil production is the sole strategic aim of PDVSA right now and until it is accomplished.

Where does Dragon gas for T&T fit into this strategic imperative for a nation in economic meltdown and PDVSA in crisis to which Venezuela is addicted? PDVSA is now Venezuela’s pusher man in crisis as the pusher man cannot supply what the addict named Venezuela craves for hence the Maduro diet for all except the bolibourgeoisie and the Punto Fijo oligarchs.

Whilst we sing optimistic songs in public driving the Dragon dance the issue is not only if the gas materialises in spite of signing a contract but what price will we pay geopolitically to the parties on both sides of the divide? How costly will be the pounds of flesh extracted by parties on both sides of the divide? The propensity for grave damage is a likely possibility!

To hitch your wagon to this disaster waiting to happen thereby risking geopolitical blowback coupled with no gas deliveries indicates that all is not as portrayed in the reality of T&T on the ground. This is desperation in action, delusion or desperate delusion?


Maduro, Russia and T&T in the Gas Dance

The Evolution of the Dragon Gas Supply: Maduro, Venezuela, Russia and T&T

The government of T&T insisted repeatedly in the public domain that it’s seeking the supply of a daily volume of natural gas from Venezuela which Maduro and PDVSA has insisted will not be supplied fully by the Dragon field of the Mariscal Sucre Project situated offshore north of the Paria Peninsula, Sucre state, Venezuela. The T&T government then stated repeatedly that as the Patao and Mejillones fields of the Mariscal Sucre Project developed gas will be sold to T&T from these fields to satisfy the daily gas supply sought by the T&T government. But Maduro and PDVSA are yet to publicly affirm this position via a public supply agreement. Silence then is now the word on the said gas supply from Venezuela as the visit of Maduro to T&T to sign off on the supply deal is yet to materialise as at December 18, 2017. But Maduro has issued statements from Venezuela and on his foreign travels citing the gas supply deal with T&T as the prime example of Maduro’s embrace of the Caribbean and his new gas driven direction for Venezuela’s energy economy where gas exports via pipelines or as LNG is the new frontier. In these statements the daily gas supply designated for T&T is in line with the daily volume stated by the T&T government in public which means that gas from the Patao and Mejillones fields are in the agreement or what T&T desires will be drawn from the production of the Dragon field. What was clear on Maduro’s pronouncements on the gas supply deal with T&T both local and foreign is that T&T was now his bitch as he has us by the short and curly. In fact, the gas supply agreement with T&T was repeatedly cited by Maduro both local and foreign as the prime indicator of Venezuela’s intent on becoming a reliable gas supplier to its neighbours under the new gas economy. The T&T gas supply arrangement with Venezuela is cited by Maduro as an indicator of his legitimacy as President of Venezuela. Then there was word from Miraflores but we don’t know if that word was in fact accurate or fake news that Maduro had in fact signed off on the gas supply agreement but from the T&T government there is only silence.

On December 17, 2017 the play T&T was now caught in became clearer as Maduro met with Igor Sechin CEO of PJSC NK Rosneft in Venezuela where licences were authorised for Group Rosneft a subsidiary of NK Rosneft to explore and develop the non-associated gas reserves of the Patao and Mejillones fields of the Mariscal Sucre Project. Group Rosneft is authorised by these licences to be the operator of the project and to export all production of these fields as pipeline gas and/or LNG with Group Rosneft and PDVSA each holding 50% of the equity of the project. This event in Venezuela puts in train the Heads of Agreement signed with NK Rosneft in 2016. Russia in the house! T&T in its quest for gas from the Patao and Mejillones fields as of December 17, 2017 now has to dance with NK Rosneft and Putin.

The quest for gas from Venezuela has now sucked T&T into a geopolitical quagmire as gas from a Group Rosneft/PDVSA entity raises the issue of the impact of US sanctions on Russia and Venezuela and how it impacts the conduct of business with Rosneft and PDVSA by T&T entities. Can sanctions placed on Russia by the US be applied to products manufactured from gas sourced from the Rosneft/PDVSA entity in T&T exported to US markets? To step back from embracing Rosneft produced gas can have blow-back on the Dragon supply as the pipeline can slowly go dry. As a step back is a rejection of the business and political model of the gas supplier across the Gulf. Whilst dancing according to the rules of the gas supplier across the Gulf invites the push back from the hegemon in the room summed up in the person of the Donald. Possibly this is the aim of the Maduro dragon dance: to marginalise a geopolitical threat at the underbelly of Venezuela? Consider that in light of the oil play offshore Guyana at present.

T&T is between a rock and a very hard place as we have inadvertently entered a geopolitical game of thrones because of the failure of all ruling politicians of T&T to police the natural resources of T&T to ensure supply that serves the interests of T&T not that of the globalised transnationals. We failed miserably to learn from the Norwegian model. We are now a pawn in a geopolitical battle for regime survival vs regime change powerless to impact and determine the outcome of the game. A pawn to be played to the strategic benefit of the warring parties only. A geopolitical fiasco of our own making. The Dragon will dance on all of us in T&T!


Venezuela’s Position on the Supply of Dragon Gas to Trinidad and Tobago (T&T)

Venezuela’s Position on the supply of Dragon gas to Trinidad and Tobago

In a news report dated March 16, 2017 on the PDVSA website in Spanish stated that the Framework Agreement for the supply of natural gas to T&T was signed in Caracas. This agreement has as its parameter the building, operation and maintenance of a pipeline connecting the Dragon field Venezuela to the Hibiscus field T&T some 30 kilometres long. The report stated that a special project vehicle constructed as a joint venture was signed between NGC of T&T and Shell international at the said meeting in Caracas. It was reported that Luis Prado signed for Shell. The report states that Minister Martinez of Venezuela indicated that Shell will construct the infrastructure necessary in T&T to receive the gas from Venezuela and that the Dragon gas deal involves the negotiation and finalisation of an agreement between three parties to the mutual benefit of all three: Venezuela, T&T and Shell. Minister Young of T&T in the report describes Shell as a “collaborating partner”.

A news report dated March 31, 2017 on the PDVSA website in Spanish reported that representatives of Shell and the NGC had visited Guiria to confirm that that the mechanical completion of the submarine infrastructure of the Dragon field was in fact realised. Necessary for completing the project to supply 300 million cubic feet of dry gas to T&T. The joint coordinating commission formed in T&T comprises Venezuela, NGC and Shell was reported by the news report.

A news report dated May 17, 2017 on the PDVSA website in Spanish reported that PDVSA and Shell held a meeting in Venezuela to discuss matters concerning the gas supply from Dragon to T&T with no member of the NGC and the T&T government mentioned as being present at this meeting in the news story. The president of PDVSA and the president and vice-president of PDVSA Gas were there along with Luis Prado president of Shell Venezuela and T&T and the Shell representative for the Americas and Africa but no mention of NGC representation. The news stated that the PDVSA and Shell officials discussed gas prices, gas volumes and the point of interconnection between the Dragon field gas supply and the pipeline to T&T. The vice-president of PDVSA indicated that they are presently reviewing the gas export base of the field, they have received proposals to complete the project and to increase production from the field to enable an increased gas supply to T&T. The meeting also discussed the joint venture Shell has with PDVSA, the Petroregional del Lago project which is a land based oil producing joint venture project.

Shell has then irons in the fire with the prime agenda being the Petroregional del Lago project as Venezuela needs to raise oil production and PDVSA simply doesn’t have the cash to spend to bring about this increase. On del Lago Shell then announces its intention to invest USD 400 million in the venture and its now Maduro’s sweet heart on both sides of the border. What is Shell’s locus standi in this Dragon gas supply project? Is Shell negotiating gas prices and volumes with PDVSA in our absence simply because Venezuela is selling the gas to Shell who is then selling it to the NGC? Is Shell building the necessary infrastructure in T&T waters in keeping with the task of being the vendor for Dragon gas to the NGC? The news report of March 16, 2017 stated that gas from Dragon will be going to the LNG plant in T&T. The power relations of the geopolitics of the gas supply between Venezuela and T&T are not in T&T’s favour unlike the deal with Aruba and the key to these power relations is Venezuela’s gambit. What does Venezuela intend to achieve in its favour that redounds to the benefit of Maduro with this gas supply deal is the primary question that must be answered realistically. When PDVSA sits in a room with Shell and negotiates only with Shell it’s also negotiating with the largest single shareholder of Atlantic and the Dragon field is a very small field in the arsenal of offshore gas plays of Venezuela. The people of T&T remain in the dark on this reality as we did with the deal negotiated for trains 1 to 3 at Atlantic LNG and as always we’re left holding the dirty end of the stick as the gas economy has become unstuck.


Geo-Politics of LNG 2017 T&T

The LNG Reality Impacting T&T in 2017

The inability to produce and supply the requisite amount of gas to Atlantic LNG necessary to maximise economic production levels is not the only reality impacting the contribution of this facility to the national coffers. The reorganisation of world energy markets as a result of US exports of shale gas LNG and the coming on-stream of especially the LNG plants in Australia have especially impacted the Asian market which is the largest market for LNG trades. The increased volume of supply has now allowed the Japanese importers with the support of the government to insist that the destination clauses of the long term contracts that forbid Japanese importers from re-selling their imported loads be amended to allow Japanese re-selling. Suppliers including those operating in T&T are applying the pressure for the Japanese importers to drop this request but US shale gas LNG producers as Cheniere are offering contracts linked to US Henry Hub prices unlike the present contracts which are linked to oil prices and allow re-selling of loads purchased from US suppliers. The lesson in this scenario to T&T is that under the contracts ratified by the then UNC government for trains 1 to 3 the LNG exporters of T&T can move product to various markets but they are taxed on US Henry Hub prices even though the prices at the importing market are higher and the operators also allow importers of T&T LNG to re-sell their loads as is the case with Gas Natural of Spain but these said operators insist that Japanese importers cannot re-sell loads sourced from these operators. Wonder why? Wonder who is a major shareholder of Gas Natural? The US producer is presently supplying loads governed by contracts signed with Japanese importers. US shale gas LNG has also entered Latin American markets and as production expands and new production facilities come online the competition posed to T&T LNG will intensify as it’s clear that US producers intend to win market share by any means necessary and with a facility in T&T faced with a heightening shortfall in gas supply in existence without relief for some 5 years hard decisions will have now to be made by the major shareholders especially Shell. The acquisition of BG at a most inopportune time in the energy industry has forced Shell to dispose of assets in order to reduce the debt on its balance sheet and this process commenced in 2016 and continues. Shell has repeatedly made it clear that it intends to continue to grow its LNG trading arm towards ensuring it is the premier LNG trader in world markets and in 2016 Shell indicated that this strategy is not premised on investment in LNG production facilities that it considers offering less than optimum return on investment in the life of facility. The report on Bloomberg in 2016 that Shell was rumoured to have marked its shareholding in Atlantic for disposal possibly arose from this strategy of Shell. But Shell in 2017 and thereafter has another strategy possible in T&T that will contribute to attaining its LNG trading strategy and maximising its take from the gas market from T&T by biting multiple times on the LNG cherry. You sell your shareholding in Atlantic but bind the purchaser of your share to long term LNG supply contracts to Shell’s trading arm which you then sell on world markets, you develop the gas fields acquired from BG in T&T and become an independent/non-shareholder supplier/seller of gas to Atlantic bypassing the NGC cut off the top and to facilitate all of this you dance with the Chavista government of the day to enable the supply of gas from Dragon to the designated end users then you enable the Loran/Manatee development and the flow of gas to T&T with you and Chevron as gas suppliers. A T&T government ever thankful, ever beholding to Shell has then to facilitate the multiple biting of the cherry and enabling the cherry to grow in size whilst being bitten. In the reality of this dreamland scenario I wonder what we the ordinary citizens profit from this. What profit in this for us? Remember diversification T&T style is foreign franchise merchandise, goods and services for sale on the local market burning up foreign exchange it does not and cannot earn but such is the model of Bogota, Panama City and Santo Domingo and others in the Caribbean Basin. New England, USA remains the most profitable US market for LNG from T&T as the pipeline system to move shale gas into this state especially during winter remains underdeveloped to satisfy demand for energy especially during harsh winters as the 2016/17 winter. Imported LNG via Everett, Massachusetts which is close to Boston is used to satisfy energy demand resulting in an explosion of prices per million BTU at Everett outstripping Henry Hub prices. In this scenario LNG produced in T&T is sucked into this market to exploit the high gas prices. But what is the benefit of exploiting this windfall price to the people of T&T given the terms of the contract governing especially Trains 1 to 3 of Atlantic? But this artificially produced shortfall in supply is under pressure from the energy supply companies and with Trump and his merry oil men in power brace for the end of this artificially created choke point as it’s not only Standing Rock will soon capitulate.


The REALITY of the Gas supply deal with Venezuela

Is the Dragon dancing for T&T or another case of being played by Venezuela?

On December 5, 2016 the gas supply deal from Venezuela to Trinidad was signed in Caracas and they danced with the instance of African Venezuelan culture presented at the signing which led me to ask if they dance and what they dance when the Chinese and Russians are in town signing huge deals? From the outset what is potently apparent is that T&T has hitched its wagon to the Maduro dynasty because of the collapse of the strategy embarked on by all ruling politicians in T&T since the arrival of Amoco. They have all failed T&T singularly and we will now pay the price as the Dragon is dancing upon us.

The Mariscal Sucre project is the brain child of deceased Hugo Chavez where four offshore gas fields: Dragon, Patao, Mejillones and Rio Caribe located to the north of the Paria Peninsula will be developed and the gas piped into an industrial complex at Guiria, Sucre state including a LNG train. To-date only the Dragon field is producing gas, it is 100% operated by PDVSA and the gas is feed into the national gas network. In February 2016 PDVSA and Rosneft of Russia announced that they had signed off on an agreement to develop Patao and Mejillones and possibly Rio Caribe but what is to be done with the gas produced was not placed in the public domain and no work on these fields have started to date by the said joint venture. The question remains: why will a foreign investor invest valuable USD in gas production in Venezuela to sell what it produces in Venezuela when Venezuela is BROKE and PDVSA does not have the money to fund the project on its own? Why invest in a LNG train in Venezuela with the US ramping up shale gas production which is bloating their natural gas stocks in storage and there is a world LNG surplus? Then there is the potent example of Repsol and Eni and the Perla field where with the discovery of conservatively 17 trillion cubic feet of gas you are told you must first supply the Venezuelan gas market at a stated volume per day and in 2016 you have almost covered your daily obligation but what happens next? The gas supply market has so changed in Venezuela in 2016 Venezuela is exporting gas to Colombia a drastic change from begging for gas from Colombia when you are obligated under an agreement to supply gas to Colombia. The closed Colombia-Venezuela border was suddenly opened the truck loads of food started coming into Venezuela and the Venezuelans cross over into Colombia looking for food to purchase with Bolivars that are accepted in Colombia now there is talk of formal exchange convertibility. By comparison what is happening with Maduro’s USD 50 million revolving fund for purchases in T&T? It went Colombia! So the food flowed then the Venezuela gas flowed to Colombia along with all the illicit tankers of gasoline, LPG etc. back to business gangstas rule!

An article in Oil & Gas Journal states that T&T wants 500 million scf/d of gas from Mariscal Sucre but since is only Dragon presently in production only 100 million scf/d will be sold to T&T and the rest when the other fields come on stream. T&T has then to wait on Rosneft time to now kiss up to Putin join the line behind Trump! We are now looking for 500 million scf/d with daily demand in T&T in excess of 3,000 m scf/d. No matter the Maduro gambit the present government has to dance with BP and grapple with the demands BP is making since the last government. Kamla’s strategy of denial and do nothing aren’t working whilst we are now Maduro’s bitch but I wonder what he wants from T&T? And a future Putin bitch then a XI bitch as we might have to go to Beijing to beg for their help with Maduro and whoever follows and with Putin. This is where the politics of race put us!


Nicolas Maduro and us

My article titled “Nicolas Maduro, Venezuela and the end of the Chavez experiment” has been posted to my website. Maduro has made the rounds of the Caribbean island chain sharing out promises as in the case of T&T and the members of Petrocaribe all in one week. At the Petrocaribe council of Ministers held in Caracas last week first gas from the Loran field via T&T was promised to the Caribbean member of Petrocaribe then it was the creation of a gas pipeline from Venezuela to these member islands. Maduro is playing out of Chavez’s playbook drawn up for a match long ended as he is seeking to preempt an imperial agenda by being everything to everybody in an attempt to hopefully distract from harsh realities at home worsened by his unannounced and unexplained austerity medicine applied to Venezuela as Venezuelans labour under Maduro’s austerity that he terms the “economic war”. Maduro is playing survival politics hoping that 2017 will be better but the three card shuffle now you see it now you don’t others are willing to play with Maduro in the quest for gas is a game which potently indicates the unfavourable news received in London town during the visit. Added to this are the news reports that Shell is seeking to sell USD 30 billion in assets including its assets in T&T to pay down on the huge debt they now carry after gulping BG. Maduro is in play, T&T is in play and Shell is in play and can play T&T in the gas play. That is what you call symptoms of a failed paradigm. The article on Maduro is at:!caribbean-social-order/gcovi


Longevity of LNG glut is the problem

The problem we face in T&T is not caused by the collapse in oil prices as our daily oil production is below 80,000 bpd. The problem is the glut of LNG seeking buyers by any means necessary and any rise in oil prices say to USD45 at best for WTI with the consequent rise in contract LNG prices triggers a rebellion of buyers on contract. Contract due for renewal in 2017 and 2019 are under pressure already by a buyers’ rebellion for those contract prices to reflect market reality. Qatar has already signalled to buyers its willingness to cut prices to retain market share increasing the pressure on LNG producers and Russia and Norway are flooding Europe with pipeline gas to maintain their market shares of the market. Some have insisted that in the next two to three years the market will sink into a bloodbath very similar to the oil market. Others have stated that the LNG market will attain balance possibly by 2025 until then glut is the reality. Why then must BP tap increasingly smaller pools of gas to supply LNG trains to market a product in a glutted market until possibly 2025? The issue is no longer incentives from the government to tap pools of gas but to change the business model that will allow the gas producer to maximise returns on investment on both the local and international gas markets. Then the gas producer must sell gas directly to the end users who use gas as an input in an export driven enterprise in T&T. The cost of gas to the LNG trains must be competitive in light of international market realities hence little or no rents charged. That is the advice you will get when you take your business to the purveyors of the Washington consensus. In this new revenue horizon you must then radically cut your state expenditure and deepen the neo-liberal order the politicians in T&T love. If you want to borrow because you are addicted to grand state projects that change little but the balances on offshore accounts you must have the assent of the Consensus and to get this assent you have to deepen your dance with neo-liberalism where less than 1% become even richer and the rest of us learn how poverty is the hottest part of hell. The present right wing neo-liberalism worshipping government of Norway dipped into the sovereign wealth fund and the dippings continue to escalate because neo-liberalism solves only the problems of the super rich whilst we the poor have no problems to be solved because the exploitation our problems make the super rich what they are. To address our poverty is then to render neo-liberalism irrelevant. Out politicians will never accept this and the death of the politics of race.;_ylt=AwrC1CrpGRpXCBEArlzQtDMD;_ylu=X3oDMTBybGY3bmpvBGNvbG8DYmYxBHBvcwMyBHZ0aWQDBHNlYwNzcg–