Noble: Playing chess with The Dragon; Dr Rowley’s gas gamble

“For any developing economy dependent on a single export commodity, powerful economic and political forces, both domestic and external, qualify the choices open to governments and structure their incentives.

“[…] It is tempting to put the blame on poor leadership and examples of questionable public policy. In the end, governments are the main recipients of oil revenues and decide how they will be spent.”

Anthony T Bryan (ed Boopsingh and McGuire, 2014)

There has been considerable dialogue in the public arena about the implications and possible impacts of Dr Keith Rowley’s announcement relative to the US waiver and the Dragon Field.

Many comments posit that the Trinidad government is an independent actor in the overall picture. This posture runs counter to the quoted Bryan’s position.

Professor Bryan is an independent consultant on energy geopolitics focusing on Latin American and Caribbean energy issues, including oil, gas, LNG and alternative energy projects.

Some acknowledge the roles of other players in varying ways but question whether the deal can be operationalised. None that I have read has explicitly spoken to the possible decisions by the Trinidadian government on public spending.

In reading the comments, this development appears to be purely the province of energy experts and politicians. As a non-oil and gas expert, I wish to offer an alternative perspective.

Our history of relationships with Venezuela precedes this event. As a child in San Fernando, I was aware of fleeing Venezuelan political refugees coming here while others came to learn English. In those days, there were numerous news items about fishermen being caught by either government. Indeed, we all recall the Caricom spat over PetroCaribe.

Professor Andrew Jupiter reminded us in his book, Red, White and Black Gold, that the exploitation of these cross-border gas reserves has a long history and that agreements have been in place.

These resources are not inconsequential but promise to radically change the participants’ fortunes.

Gregory McGuire says: “Major areas we are talking about are down south. We have the Plataforma Deltana, in which lie three fields that straddle the borders of T&T and Venezuela: Loran-Manatee, Coquina and Kapok/Dorado. These fields, and that entire area, are estimated to have between 21-38 trillion cubic feet (tcf) of reserves, and that’s just down in the South.

“In the north, where the Dragon field is located, it is estimated to have more than 12 tcf of reserves and production potential of 1.2-1.5 billion cubic feet a day.”

We should contextualise Venezuela’s posture.

Venezuela has withstood the economic sanctions for over three years and not flinched. They found ways to ship their oil to third parties, including China. Do we recall the flap over a shipment of local oil to Aruba?

Or do we recall the brouhaha over ships that transited through our waters from and to Venezuela?

Venezuela president Nicholás Maduro has never seriously tried to provide greater internal freedom nor participate in the Norway discussions. At the beginning of 2022, amid the Russian invasion of Ukraine, the United States approached the Maduro regime for direct talks in a significant geopolitical shift.

These talks eased US sanctions, enabling Chevron to reactivate its oil operations in Venezuela on a six-month licence.

Experts claim it would take Chevron two to three years to develop its assets. Therefore we should be wary of the “experts” suggesting our permissions are useless. We are witnessing a global chess game.

None of the local dialogue spoke to the recent Colombia-Venezuela agreement to revive the Antonio Ricaurte gas pipeline—a 139-mile installation that cuts across Guajira, the northernmost peninsula in South America, which had laid idle for a decade.

This contract is more troublesome than ours, given the torturous history of the countries. But the gas produced from Venezuelan oil wells is often flared off because there is limited infrastructure to store it and no liquefied natural gas (LNG) terminal to export to foreign markets. There are two options: Colombia or us!

“Petropolitics” is not a new weapon, and Maduro, like his predecessor Hugo Chavez, is a master of this game. The Chevron deal, the emergence of a new Opposition alliance to replace Juan Guaidó, and the last US Presidential election—with the hardening of the Florida lean to the Republican party—all conspire to create more wiggle room for both the US and Venezuela.

These negotiations seek to bring a better life for ordinary Venezuelans.

On the Trinidad front, the Rowley government has played the patient game, albeit with their cards tightly held to their chest.

Remember the Delcy Rodríguez visit at the start of the Covid restrictions? The Rowley-Stuart Young shuttles to London and Houston? The call to fire Mark Loquan and the Board for the Train 1 expenditure?

Did anyone pause to question why Loquan, indubitably one of our foremost energy practitioners, would do such a “madness”?

We saw the moves but never connected the dots. Was that expenditure our entrance fee to enter the consolidation game with the other Trains? This elaborate dance is not a repeat of the Sandals negotiations since neither Shell nor BP is a small-bit player that spouts their mouths, nor do they need a local business person to broker their deals.

To his credit, Gregory McGuire saw the Train 1 move and, at the time, smelled the rat.

He did it in the face of a leading commentator’s remark: “Atlantic LNG Train 1 is dead… It is as simple as that. No amount of spin, no amount of stalling, no amount of attacking the media and citizens, no amount of blaming the multinationals, no amount of hand-wringing will change that.

“The gas is simply not there, will not be there any time soon, and the corollary of all of that is the National Gas Company’s ill-fated attempt to save Train 1 has failed, and the money gone down the proverbial drain.” Oops!

When you are playing chess with a Grand Master, you should wait when they make a Dragon Sicilian move. The “Dragon move”, deserving its name, is one of the fascinating openings in chess. It’s risky for both sides because black goes all in for the win, and White is forced to react accordingly, or else they get washed from the board.

Often, the Dragon will be called dead and refuted. But its resourcefulness has proven to be never-ending.

We now realise that Dr Rowley was playing the long, if risky, game—really an all-or-nothing game. He was betting on the Maduro government gaining space in the global chess game.

As a descendant of Michael Manley and Dr Eric Williams, he was thumbing his nose at the Donald Trump loyalists.

We saw the return of Shell and their busy acquisition forays, but did we make sense of that? Did we miss the broad hint given by Loquan at the signing of the December 2022 Shell agreement?

He said: “the agreement could also free up resources for the development of offshore resources…(like) Manatee project and other deepwater acreage that will hopefully bring more gas into the system.”

In an international magazine, the Shell spokesman said: “As we near completion on the agreements for restructuring of Atlantic, we will continue to work with the government and Atlantic shareholders to ensure that both the shareholders and Trinidad and Tobago will derive significant benefit from the new commercial structure and enable future upstream developments.”

In his book, Jupiter reminded us that Shell plans for 25 years. In his 31 January 2023 interview with the Express, he expanded: “[…] I think it was not by accident that it bought the interest in Atlantic to become the single largest shareholder, and also it bought BG, and it is involved with the government with this project. Shell would not invest its money unless it can get a return and unless it has sound legal backing for what it is doing.”

That interview is a must-read.

As a country, we have a golden opportunity to reset our development. We are witnessing unending gloom and despair.

Our people are suffering the effects of the global fallout of Covid and the Russia-Ukraine war. Life is brutish and dark for those outside the energy sector and business chambers. The workplaces are cruel and selfish arenas without dignity or respect.

The past sacrifices do not matter to the present mandarins who drive their chariots imperiously.

Will we institute policies that will roll back the pain we suffer? Or are we going to continue to allow the rich to rub their hands in glee at the coming wealth? Or are politicians and their funders going to steal all they can to the detriment of our country?

We need to invest in our youth through better schools and health care. Will we stop the crime by so doing?

The next elections will tell us our choices.

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