Shell Pauses Trinidad's Aphrodite Gas Project After Commercial Negotiations Fail
By Curtis Williams
Shell Shelves Aphrodite Offshore Gas Project Amid Failed Negotiations
Aug 24 (Reuters) - British oil major Shell has shelved its Aphrodite offshore gas project in Trinidad and Tobago after disagreements over commercial terms with Trinidad's National Gas Company, three people familiar with the decision said on Monday.
Background and Project Details
Shell had given the project a positive final investment decision last year, but it has decided for now not to proceed with the development after negotiations with NGC for the sale of the project's expected output of around 100 million cubic feet per day of natural gas failed, the sources said.
Role of NGC and Shell in Trinidad's Gas Sector
NGC acts as Trinidad's gas aggregator, purchasing from producers and supplying it to downstream users, including the petrochemical sector and the country's flagship liquefied natural gas project, Atlantic LNG, where Shell is a 45% shareholder.
Operational Impact and Company Statements
As part of its decision, Shell has released a jack-up rig it had contracted to drill the production wells for the project, the people said.
"Shell is in ongoing negotiations and confirms that the initial rig slot for Aphrodite has been released," Shell told Reuters.
The company will continue to evaluate the overall integrated project schedule, it added. NGC did not respond to a request for comment.
Implications for Trinidad's Energy Sector
Trinidad is the largest LNG exporter in Latin America. The decision represents a setback for the Caribbean country's efforts to reverse years of declining natural gas output, which has curtailed its LNG exports and petrochemical production.
The Aphrodite project's anticipated production would have provided a modest but welcome boost to the island's gas supplies.
Industry Challenges and Future Prospects
Industry participants have increasingly pointed to commercial challenges, including gas pricing, as being responsible for the recent closure of several petrochemical plants on the island.
Trinidad expects to soon have access to gas from neighboring Venezuela as Shell and BP advance plans to produce there, which would complement domestic output.
Cross-Border Gas Developments
Both companies have been granted licenses by the Venezuelan government related to cross-border gas developments expected to allow Venezuelan gas to be produced and transported to Trinidad for processing and export. Those projects are viewed as critical to replenishing supplies to Atlantic LNG and supporting the country's energy sector over the coming decade.
(Reporting by Curtis Williams in Houston; Editing by Marianna Parraga, Lisa Shumaker and Sonali Paul)
