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Exposure to assessing business risk, including the political risk of doing business in unstable environments, underlines that political and geo-political risks are volatile factors.
When Prime Minister Rowley (the PM) recently exhorted that we “hold the fort”, he reportedly linked “a better position with the energy industry in the second quarter of 2027” to agreements successfully negotiated between the Venezuelan and Trinidad and Tobago governments concerning the Loran-Manatee gas field that straddles the border between Trinidad and Tobago and Venezuela and the Dragon Gas field in Venezuela.
Photo: Office of the Prime Minister
Regarding the Dragon Gas field, he was quoted as saying that it was “very close to our Hibiscus platform which BP and Shell operate at the time and the seismic work is either very close or is progressing.”
The PM reportedly added: “Let us not be too distracted with the geo-political. We all have an interest in success, in peace and security and good commercial arrangements between Venezuela and T&T.”
See Trinidad Express (the Express) 28 September 2024.
When I read the statements quoted above, it was the invitation “not to be too distracted with the geo-political” that immediately set me thinking.
My thought process was further stimulated when, a week later, according to a report in the Express on Sunday last, the PM speaking on a post-budget party political platform warned against celebrating setbacks in the energy sector—a warning presumably directed to the attention of the Opposition United National Congress (UNC), its supporters and anyone listening to them.
The PM was quoted as follows: “When people could be celebrating that Niquan blow up, could be celebrating that [Venezuela President Nicolàs] Maduro could do this and the Dragon deal dead, when they could be celebrating that… I just want to warn you all: in the absence of a stream of gas coming from those projects that we have on the border and across the border, this country will not be able to afford its bills.”
It seems to be a fair summary of the current situation that we are banking on obtaining from Venezuela the supply of gas we so badly need and that without it we will fall on very hard economic times.
I also believe that it is fair to inquire whether there is anything in place—a “Plan B”—to mitigate the hard times if we fail to obtain the Venezuelan gas. It certainly seems that there was little appetite for variation or reform of our oil and gas-centric economic model while the good times could be kept rolling.
Photo: Getty Images
Reliance on one plan is more fraught with danger in a situation where we are borrowing money to service expenditure at current levels and are operating in a deficit. The major contributors to the repeated deficits are transfers and subsidies, any curtailment of which would be bad for any party’s electoral prospects.
Moreover, reference to releases from the United States (US) Departments of State and Treasury, respectively, reveal a shifting pattern over a ten-year period in the application of US sanctions—first on Venezuelan officials and later by the frequent issue of widening Executive Orders blocking specified dealings with Venezuela and certain of its entities, including transactions in the oil and gas sector.
During the current Joe Biden-led administration, certain transactions were authorized on a case-by-case basis through a series of selected general licenses.
However, during this year, 2024, the extent of sanctions was toughened again, and certain operations that benefitted from some relaxation of sanctions were required to go into “wind-down” mode when their licences “expired”.
What will happen next, particularly as current Middle East hostilities have drawn in Iran, which is Venezuela’s ally but an enemy of the US?
Of course, it would be “crazy” to wish any government of ours to fail in its dealings with Venezuela, but nevertheless, in this unstable situation, is it sensible to consider the geo-political elements surrounding our deals with Venezuela for gas as “a distraction”?
Is it not urgent to begin to think of mitigants and to have a contingency plan in place in case there are hiccups arising out of the political risk of our doing business with Venezuela?
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Martin G Daly SC is a prominent attorney-at-law. He is a former Independent Senator and past president of the Law Association of Trinidad and Tobago.
He is chairman of the Pat Bishop Foundation and a steelpan music enthusiast.
