BP and NGC Secure License to Develop Cocuina-Manakin Gas Fields

BP plc (BP), the UK-headquartered energy giant, and Trinidad and Tobago's state energy firm NGC have obtained a two-year license from the U.S. Treasury Department, per a Reuters report. This license will allow them to negotiate and develop the Cocuina-Manakin gas fields in partnership with Venezuela, Trinidad's Energy minister Stuart Young announced on Wednesday.

The new license has enabled BP and NGC to embark on a project involving an offshore reservoir containing approximately 1 trillion cubic feet (tcf) of gas reserves. This reservoir straddles the maritime boundary between Venezuela and Trinidad. Young, in a media briefing in Port of Spain, highlighted the strategic importance of this initiative and its potential to bolster Trinidad's energy supply.

The authorization marks the second such license issued by the U.S. government for energy projects between Venezuela and Trinidad. In 2023, Shell plc SHEL and NGC received a similar license for the Dragon gas field in Venezuela, a project that is set to export gas to Trinidad and has recently had its license extended through October 2025.

Young clarified that the terms mirror those of the Dragon project, enabling payment in the U.S. currency. This condition permits transactions in hard currency, offering a vital exemption from the strict U.S. sanctions imposed on Venezuela.

Earlier this month, BP had put negotiations for Cocuina-Manakin on hold, pending U.S. authorization. With the new license in hand, the company is expected to resume its plans quickly. However, BP is yet to make a public statement on the development.

The recent authorization to BP and NGC is part of a broader trend of the U.S. government issuing licenses to international companies for limited engagements with Venezuela. France's Maurel & Prom, Spain's Repsol, and the Caribbean Island of Aruba have also received U.S. licenses of late. For instance, Aruba has been authorized to import Venezuelan fuel oil for domestic use, as confirmed by prime minister Glenbert Croes.

Venezuela, under sanctions since 2019, is eager to initiate gas exports to diversify its revenue streams. Concurrently, Trinidad is seeking new gas supplies to support its petrochemical and liquefied natural gas industries amid dwindling domestic production.

In addition to Cocuina-Manakin, Venezuela and Trinidad are eyeing another joint gas development project involving the Loran-Manatee fields, which hold an estimated 10 tcf of gas. Shell, which oversees the project on the Trinidad side, has yet to make a final investment decision.

Young highlighted the strategic planning behind these advancements, noting discussions with president Nicolas Maduro concerning Loran during their last meeting. He emphasized the importance of a focused strategy, tackling projects methodically, one by one.

This evolving landscape signifies a cautious yet significant engagement between international energy firms and Venezuela, potentially reshaping the regional energy dynamics and contributing to economic stability in both Venezuela and Trinidad.

Zacks Rank & Key Picks

BP and Shell currently carry a Zack Rank #3 (Hold) each.

Investors interested in the energy sector may look at a couple of better-ranked stocks like Marathon Petroleum Corporation MPC and SM Energy Company SM. While Marathon Petroleum currently sports a Zacks Rank #1 (Strong Buy), SM Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Marathon Petroleum's acquisition of Andeavor has expanded its foothold in the Permian Basin, creating an enviable retail and marketing portfolio. MPC’s emphasis on operational excellence, safety and environmental responsibility, coupled with investments in low-carbon initiatives, positions it well for sustainable growth and continued value creation for shareholders. 

The Zacks Consensus Estimate for MPC’s 2024 EPS is pegged at $19.28. The company has a Zacks Style Score of A for Value. It has witnessed downward earnings estimate revisions for 2024 in the past 30 days.

SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.

The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $6.63. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 in the past seven days.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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