KEY POINTS
- The US Treasury has granted Shell and Trinidad a licence to negotiate and develop Venezuela’s Dragon gas field through 2026.
- The approval includes a requirement for US company participation and bans direct cash payments to the Maduro government.
- The project could help stabilise Trinidad’s LNG sector while offering a model for limited cooperation under sanctions.
The United States has granted approval for Shell and the government of Trinidad and Tobago to jointly advance development of the long-stalled Dragon offshore gas field in Venezuelan waters, marking a significant step forward in regional energy cooperation after years of uncertainty under sanctions.
Trinidad’s Attorney General, John Jeremie, confirmed the authorisation on Thursday, describing it as a “measured but meaningful” step that will allow both parties to resume negotiations with Venezuela and its state energy firm, PDVSA, through April 2026. The green light follows months of diplomatic back-and-forth between Port of Spain, Washington, and Caracas over how to balance commercial interests with the complex web of US sanctions imposed on Venezuela since 2019.
“The United States has structured the licence in three phases, beginning with permission to negotiate terms,” Jeremie said. “The agreement also requires participation from American companies in the project’s development, ensuring US interests are directly aligned with the outcome.”
A Test of Energy Diplomacy
The Dragon gas field, which holds an estimated 4.2 trillion cubic feet of reserves, sits near Venezuela’s maritime border with Trinidad and has long been viewed as a potential lifeline for the island’s gas-dependent industries. Trinidad’s liquefied natural gas (LNG) and petrochemical sectors have faced declining feedstock supplies in recent years, heightening the urgency to secure new sources.
Under previous sanctions regimes, the project’s progress was repeatedly halted. The Trump administration terminated earlier licences, reversing the limited permissions that had been extended under President Joe Biden. The new authorisation represents the first major signal that Washington is willing to permit carefully managed cooperation in Venezuela’s energy sector, provided that proceeds do not directly benefit President Nicolás Maduro’s government.
According to Jeremie, the US Treasury’s Office of Foreign Assets Control (OFAC) included explicit conditions preventing cash payments to the Venezuelan state, a clause similar to earlier restrictions. “You have to meet commercial targets for US companies,” he said, calling the terms “reasonable” and achievable.
Shell completed a marine survey at Dragon earlier this year under a temporary licence that expired in June. The data collected will help determine drilling locations and design options for a subsea pipeline connecting the Venezuelan field to Trinidad’s gas network.
Energy analysts say restarting Dragon could stabilise Trinidad’s LNG exports, boost its petrochemical output, and provide Venezuela with a non-cash route to monetise its reserves through regional trade. “If managed prudently, the project could be a blueprint for future cross-border energy cooperation under sanctions,” said a Trinidad-based energy consultant familiar with the discussions.
The US State Department has also voiced support for the initiative, stating that the deal “will not provide significant benefit” to Maduro’s administration but will help bolster Caribbean energy security.
