Venezuela is set to approve the licence for the development of the Dragon gas field, reported Reuters, citing people close to the matter.

The licence will allow Shell and Trinidad & Tobago’s National Gas Company (NGC) to develop the offshore natural gas field, which sits on the maritime border between Venezuela and Trinidad & Tobago.

The Dragon project was scheduled to start production over a decade ago. It is owned by Venezuela’s state-run oil company, Petroleos de Venezuela (PDVSA).

However, US sanctions as well as lack of capital delayed the start of production at the field.

The licence from Venezuela will allow Trinidad to undertake business related to the Dragon field with Venezuela’s PDVSA.

In January 2023, the US granted a two-year licence to Trinidad & Tobago to develop the project, which is estimated to hold as much as 4.2 trillion cubic feet of gas.

Venezuela and Trinidad are now discussing an exploration and production licence for a 25-year period for the Dragon field.

According to the people, some of the terms between the two countries are due to be settled. If materialised, the countries could sign a deal in the coming days, reported Reuters.

The licence is expected to allow the supply of 300 million cubic feet per day (mcfd) of Venezuelan gas to Trinidad for liquefied natural gas production and an additional 50mcfd to petrochemical plants. This could be effective from late 2026.

Shell will operate the project with a 70% interest. Trinidad's NGC will own the remaining 30% stake.

Last month, the US temporarily eased sanctions on Venezuela. It also amended the authorisation for the Dragon field allowing Venezuela to receive proceeds from the sale of the gas.

Since then, negotiations between the countries were fast-tracked, according to a third person.