Why Washington’s reported green light for Shell’s Venezuela-Trinidad gas deal could change global LNG trade flows

Shell plc (NYSE: SHEL) is reportedly close to winning U.S. authorization to export Venezuelan natural gas to Trinidad and Tobago, a move that could reopen one of the hemisphere’s most strategic energy corridors.

According to Bloomberg News, later confirmed by Reuters, Washington is finalizing an Office of Foreign Assets Control (OFAC) license that would permit Shell and its partner, the National Gas Company of Trinidad and Tobago (NGC), to restart the long-stalled Dragon gas project in Venezuelan waters.

If granted, the waiver would mark the first meaningful U.S. relaxation of energy sanctions toward Caracas in years — signaling a shift from punitive isolation toward conditional, results-driven diplomacy.

Why is Washington reconsidering a sanctions waiver for Shell’s Venezuela-Trinidad gas exports?

Since 2019, U.S. restrictions on Petróleos de Venezuela S.A. (PDVSA) have blocked transactions that could benefit President Nicolás Maduro’s government.

The Dragon project — intended to ship gas across the maritime border for liquefaction at Trinidad’s Atlantic LNG complex — was caught in that crossfire.

For Trinidad, the project is existential. Gas shortages have forced its LNG trains to run below capacity, eroding export earnings that fund public finances. For Venezuela, Dragon offers a rare, sanctions-compliant outlet for its offshore reserves. For Shell, it is a ready-made growth engine that fits neatly into its pivot toward global LNG dominance.

How much gas does Venezuela’s Dragon field hold, and why is Trinidad so dependent on it?

Discovered in the early 2000s, the Dragon field is believed to contain about 4 trillion cubic feet (Tcf) of recoverable gas. Caracas issued Shell and NGC a 30-year development license with plans for a 17-kilometre pipeline to link Venezuela’s platform to Trinidad’s downstream infrastructure.

The project first gained traction in 2018 but was derailed by U.S. sanctions the following year. A temporary license issued in 2023 allowed preparatory work but was revoked in April 2025, when Washington tightened compliance checks.

Now, sources quoted by Bloomberg say the U.S. Treasury is poised to issue a new, narrowly tailored license ensuring that revenue flows bypass PDVSA. Trinidad’s government, eager to restore its LNG throughput, has been lobbying Washington for months to approve the waiver under strict monitoring.

How is U.S. policy shifting from rigid sanctions to selective energy pragmatism in 2025?

The prospective approval highlights an emerging U.S. approach to resource-based diplomacy. Rather than blanket bans, policymakers are embracing case-specific carve-outs that promote regional stability while maintaining leverage over sanctioned regimes.

Trinidad’s gas deficit jeopardizes electricity generation across the Caribbean, and continued paralysis in Venezuelan exports strengthens the influence of non-Western powers such as China and Russia. By granting a conditional exemption, Washington can support an ally, contain adversaries, and still control the financial valves of the transaction.

Analysts describe this as “managed compliance” — a strategy blending hard-law enforcement with soft-power incentives. If successful, the Dragon license could become a template for sanction-era energy cooperation worldwide.

What technical and legal challenges must Shell overcome even if the license is approved?

Approval would merely unlock the starting gate. Shell and NGC must still reach Final Investment Decision (FID), raise project financing, and secure multiple environmental and maritime permits. Engineering, procurement, and construction of the subsea pipeline could take 18–24 months.

Legal experts expect Washington to require escrow-based payment structures and third-party auditing to guarantee that no proceeds touch Venezuelan state accounts. Any breach could revoke the waiver instantly.

Political volatility in Caracas and fluctuating U.S. policy also pose risks. Industry observers warn that even minor sanctions-policy shifts could freeze operations midstream, making risk mitigation and insurance coverage central to Shell’s planning.

 

How are investors reacting to Shell plc (NYSE: SHEL) as the Dragon approval nears?

In early October 2025, Shell’s stock rose 1.3 percent, outperforming the broader energy index. Investors appear cautiously optimistic: the potential OFAC license adds upside optionality without near-term downside to cash flow.

Wall Street maintains a “moderate buy” consensus, with average 12-month price targets of US $76–77. Institutional investors, particularly pension and sovereign-wealth funds, have slightly increased their exposure as Shell continues its share-buyback program and maintains robust free-cash-flow yields.

Technical charts show consolidation near the US $73 level, suggesting room for appreciation if the Dragon news becomes official. Retail sentiment on social platforms remains speculative but broadly positive, with traders labeling the story a “license-to-rally” event.

How does the Dragon license align with Shell’s long-term LNG strategy and capital reallocation?

The project aligns squarely with Shell’s plan to make liquefied natural gas its core growth engine. The company forecasts global LNG demand to rise by roughly 50 percent by 2040 as Europe diversifies from Russian gas and Asia’s industrial base expands.

Shell’s recent strategic actions reinforce that direction. Earlier this month, it scrapped its Rotterdam biofuels project, absorbing a US $600 million impairment but freeing capital for gas-weighted ventures. Analysts say Dragon fits that pivot perfectly — leveraging existing infrastructure in Trinidad for quicker returns than new greenfield developments.

Because Atlantic LNG already exports to Europe and Latin America, integrating Venezuelan gas could boost utilization rates and enhance Shell’s trading margins. It also positions the company as a reliable swing supplier capable of arbitraging Atlantic-Basin demand shocks.

Could this approval redefine energy diplomacy and sanction management in the Americas?

If Washington signs off, the Shell-Venezuela-Trinidad framework could become a landmark example of how sanctions and market realities can coexist. It would be the first major U.S.-sanctioned hydrocarbon project in the region to operate under full transparency and third-party oversight.

For Trinidad and Tobago, it promises restored LNG leadership and stronger fiscal stability. For Venezuela, it re-opens a path to partial reintegration into legitimate global energy trade. For the U.S., it demonstrates that sanctions need not equal stagnation.

Energy analysts interpret the move as “constructive pragmatism” — a geopolitical recalibration acknowledging that energy interdependence often trumps ideology.

What are expert and institutional takes on the deal’s feasibility and market implications?

Sector research desks call the potential approval credible but conditional. Economists in Port of Spain estimate the project could lift Trinidad’s GDP by 1 percentage point annually once production stabilizes.

Global banks tracking commodity flows predict a modest tightening of Atlantic Basin LNG supply-demand balances if Venezuelan volumes come online by 2027.

Still, analysts caution that execution risk remains high. Shell must maintain perfect compliance discipline, and any governance lapse could invite scrutiny from both regulators and activists. As one senior LNG analyst told Reuters indirectly, “the energy math works — the politics is the hard part.”

What comes next as Shell, Washington, and Trinidad finalize the terms?

Industry insiders expect the OFAC license language to be released within weeks, detailing payment channels, reporting standards, and environmental requirements. Once finalized, Shell and NGC can proceed toward FID and begin remobilizing contractors.

If construction proceeds smoothly, first gas could flow by late 2026 or early 2027. Trinidad’s Energy Ministry projects that new supply will raise LNG output by 15–20 percent in the first full year of operation.

Shell has declined to comment publicly, referring questions to Trinidad’s government, which continues to describe the initiative as a “regional energy security partnership.”

In essence, the Dragon license has become more than an operational permit — it’s a litmus test for whether pragmatic energy cooperation can survive in a sanction-constrained world. Success could redefine how multinational energy companies navigate geopolitics in the 2020s; failure would reaffirm that compliance, not capacity, is the ultimate choke point in modern energy diplomacy.