A BP Plc and Shell Plc consortium has reached an agreement with Trinidad and Tobago to explore three deepwater blocks for hydrocarbon production in the Caribbean country, Minister of Energy Stuart Young said on Thursday.
The deal would help Trinidad speed up offshore exploration and production to secure more natural gas to support its liquefied natural gas and petrochemical industries.
"The Cabinet approved the award of three deepwater blocks to a consortium of BP and Shell" on Sept. 8, Young said in a press release. A signing ceremony is planned for Tuesday, Young said. The office of the attorney general has to sign off on the deal before licenses can be awarded, people with knowledge of the matter said. Young said negotiations were complex because the blocks had not previously been explored and due to the challenges involved in deepwater development.
"The consortium can confirm that they are close to finalizing negotiations with the Government of Trinidad and Tobago relating to deepwater blocks offshore Trinidad and Tobago," BP and Shell said in a release. The agreement comes almost nine months after Trinidad's government rejected bids originally submitted by the consortium for failing to meet minimum thresholds. Shell and BP amended their original bids to include the drilling of at least three deepwater wells under a proposed minimum work program. The plan includes acquiring 3D seismic imaging of the unexplored acreage, people familiar with the matter said.
The parties have come to terms for exploring blocks 25a, 25b, and 27. The consortium also submitted an offer for block 23b, but has not reached an agreement on that area with the government, Young said.
Shell and BP are the largest shareholders of Trinidad's Atlantic LNG export project, the largest in Latin America, which has an installed capacity of 15 million metric tons per annum (MTPA). But it has been producing 10 MTPA due to insufficient gas supply. Trinidad and Tobago's deepwater round closed in June last year after the government only received bids from the BP-Shell consortium on four of the 17 blocks on offer.
(Reuters - Reporting by Curtis Williams in Houston; Editing by Kirsten Donovan and Timothy Gardner)
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