Shell Aims for First Gas Production at Dragon Field by 2026

Shell plc SHEL, a London-based integrated oil and gas company, is advancing its plans to commence natural gas production at Venezuela’s Dragon gas field in 2026, a year ahead of the previously projected 2027 launch. This ambitious timeline highlights SHEL’s commitment to securing gas supplies to boost liquefied natural gas (“LNG”) production in Trinidad and Tobago. According to sources familiar with the project, survey work is set to begin next month, with drilling operations slated to include three wells.U.S. Sanctions and Special Licensing for Dragon Gas ExportsVenezuela’s oil and gas sector, largely controlled by state-run PDVSA, remains subject to strict U.S. sanctions. However, Washington granted a special license in early 2023, allowing Trinidad’s National Gas Company (“NGC”) and SHEL to pursue gas development at the Dragon field. This license, which has been extended through October 2025, enables the companies to export gas from Venezuela’s territory to Trinidad and Tobago, ensuring compliance with international regulations.Given the recent tightening of U.S. sanctions on Venezuela, industry leaders are closely watching whether the license will be renewed beyond 2025. Trinidad’s government has been actively lobbying U.S. officials, emphasizing the strategic importance of these energy projects for regional energy security.SHEL’s Fast-Tracked Timeline to Address LNG ShortagesShell’s acceleration of Dragon’s development is driven by a pressing need to increase natural gas output for LNG production at Trinidad’s Atlantic LNG facility. The project, a key supplier of LNG to global markets, has faced significant supply constraints, operating at only 8.5 million metric tons last year, well below its full capacity of 12.5 million metric tons.The supply shortfall was further exacerbated by BP plc’s BP recent decision to decommission Train 1, a liquefaction unit that had been idled since 2020 due to insufficient gas availability. With Dragon’s estimated 4 trillion cubic feet of natural gas reserves, SHEL is poised to help bridge the gap and enhance regional energy stability.Engineering and Environmental Assessments UnderwayAs part of the development process, SHEL will commence an environmental baseline survey in April. This study will assess ocean currents, wave patterns, marine biodiversity and seabed stability, crucial for constructing a 10-mile (16-kilometer) subsea pipeline linking Dragon to existing infrastructure in Trinidad.The final investment decision is anticipated later this year, contingent on Washington’s stance on extending the U.S. license. In 2023, Venezuela granted SHEL and NGC a 30-year license to explore and develop the Dragon field, highlighting their long-term commitment to the project.Geopolitical Considerations and U.S. Policy UncertaintyDespite the U.S. government's recent revocation of Chevron’s CVX operating license in Venezuela, no specific actions have been taken against projects involving Trinidad and Tobago. However, signals from the current administration suggest a potential hardening of policies toward Venezuela, raising questions about the future of licensing exceptions for energy projects.Trinidad’s leadership has reiterated its stance on the necessity of maintaining exemptions for projects like Dragon, which play a crucial role in energy security and economic stability across the Caribbean region. Industry experts remain optimistic that diplomatic engagements will secure continued access to Venezuela’s gas reserves.Strategic Energy Move With Global ImplicationsShell’s accelerated push to develop Dragon represents more than just a regional energy initiative. It is a strategic maneuver in the evolving global LNG market. By securing additional gas supplies, SHEL aims to reinforce Trinidad’s position as a leading LNG exporter while reducing dependence on other volatile supply chains.With the first gas production now targeted for 2026, SHEL and its partners are positioning themselves at the forefront of an energy transition that balances supply security, regulatory compliance and geopolitical challenges. The success of this project will be a key moment for Venezuela-Trinidad energy relations and the broader LNG sector.Zacks Rank & a Key PickCurrently, SHEL, BP and CVX, each has a Zacks Rank #3 (Hold).Investors interested in the energy sector might look at a better-ranked stock like Archrock AROC, sporting a Zacks Rank #1 (Strong Buy) at present. You can seethe complete list of today’s Zacks #1 Rank stocks here.AROC is valued at $4.7 billion. In the past year, its shares have risen 38.3%.  Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BP p.l.c. (BP): Free Stock Analysis Report Chevron Corporation (CVX): Free Stock Analysis Report Archrock, Inc. (AROC): Free Stock Analysis Report Shell PLC Unsponsored ADR (SHEL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks