26 April 2024
The European Union (EU) has signalled its willingness to support the Dragon Pipeline between Venezuela and Trinidad and Tobago despite reimposition of US sanctions on Venezuela.
The 90-kilometre pipeline project between the two countries has been in the news in recent months following easing of sanctions on Venezuela and the granting of US waivers which were to allow the project to proceed.
In December 2023, the Government of Trinidad and Tobago signed an agreement with Venezuela for Shell and wholly state-owned National Gas Company of Trinidad and Tobago (NGC) to develop and produce natural gas from Venezuela’s Dragon field.
However, based on what the US sees as President Nicolás Maduro’s failure to allow free and fair elections under the terms agreed, the Biden Administration is now moving to reimpose sanctions which raise fresh questions about Dragon’s viability.
In a statement, the US government said that it would not renew a license that was set to expire this week which had broadly eased Venezuela oil sanctions.
Responding to the news, the Ministry of Energy and Energy Industries said that the non-renewal of the OFAC General Licence 44 “does not affect the Specific Amended OFAC licence that was issued to the Government of the Republic of Trinidad and Tobago on 17 October 2023”.
Péter Szijjártó, Hungary’s Minister of Foreign Affairs and Trade expressed Hungary’s support for the pipeline project when Hungary’s upcoming presidency of the EU commences in July under the EU’s rotating presidency.
In 2023, the EU proposed to include the Dragon Project in its Global Gateway Programme, along with a proposal to make Trinidad and Tobago’s petrochemical industry greener and more environmentally protected.
“The implementation of these two agreements will be started throughout our presidency term and we are committed to support you in the successful implementation of these two projects and to make sure the European support will be there for the entire length of these projects,” said Szijjártó.
Pressed in an interview with the Trinidad Guardian about whether the latest US sanctions could affect the implementation of the plan, Szijjártó expressed scepticism about the use of sanctions.
“We are against the approach of sanctions because we cannot recall one single sanction regime which would have been successful. We cannot recall any single sanction regime which would have hit – targeted – the leadership of that given country but we know many sanction regimes, which have, at the end of the day, harmed the people of that given country,” said the Foreign Minister.
“If there were no sanctions on the energy field, at least, new volumes of gas could be added to the global scene and also more gas could be added to the European market. If I understand it correctly, you as Trinidad and Tobago became a collateral damage of the sanctions imposed by the US on Venezuela because those sanctions have made it impossible to work more closely with the Venezuelans on energy matters and helping Europe to diversify,” he added.
It has been suggested by several analysts that following the sanctions imposed on Russia, Europe is urgently seeking other gas suppliers and resources. This urgency might lead the EU to relax its stringent compliance of US sanctions.
“The EU is, of course, very interested in diversifying its sources of energy, and in this context, the possible support to the exploitation of the Venezuelan gas field is of great interest. The EU does not have a final position on any support; however, we are willing to look positively at any proposals that are brought to its attention,” said Peter Cavendish, EU Ambassador to Trinidad and Tobago.
With Trinidad and Tobago oil and gas production seen as critical to the country’s economic health in the medium to long term, the government is keen to see the project, which Bloomberg has estimated would cost at least US$350mn and take between 36 to 48 months, move forward.
However, even with Hungary’s potential EU backing, US sanctions on Venezuela may yet affect the Dragon Pipeline and other oil and gas projects.
“If the US does things to Venezuela or about Venezuela, we can’t guarantee that some of those things would not be detrimental to us, as in fact, it has already been,” said Prime Minister Keith Rowley after the US’ Dragon waiver was first announced.
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