This South American nation possesses significant natural gas resources that could be rapidly extracted and exported, yet geopolitical challenges are hindering their development.

While Venezuela's oil reserves are indeed vast, one of the best opportunities for quickly developing the country's resources lies offshore—in natural gas fields deep beneath the seabed.

Most of these gas fields were discovered decades ago off the country's eastern coast, near the border with Trinidad and Tobago. However, they have remained largely untapped due to Venezuela's long-standing focus on oil extraction and sales.

Even before recent political events, companies such as London-based Shell had expressed interest for years in developing these gas fields. This contrasts with the general caution oil companies have shown towards entering Venezuela's oil sector. Part of the reason is that Venezuela, which tightly controls its oil assets, has shown greater openness to foreign involvement in its natural gas sector.

Sanctions imposed by the United States on the Venezuelan government and its state-owned oil company, PDVSA, remain one of the biggest obstacles to increasing natural gas production. Significant production increases and sales of Venezuelan gas would also require cooperation with Trinidad and Tobago.

Most of Venezuela's gas fields are located near the maritime border with the island nation. Unlike its neighbor, Trinidad and Tobago possesses the infrastructure to bring gas ashore and export it. However, relations between the two nations, separated by just seven miles of water but differing in language, have deteriorated over the past year.

Venezuelan leaders are displeased with Trinidad's alignment with the United States regarding the Venezuelan government. Relations with another neighbor, Guyana, which also possesses substantial energy reserves, have been even more hostile. It remains unclear whether the current administration plans to repair these relationships.

The Dragon gas field, named after the rough waters separating Venezuela and Trinidad, is one of the projects closest to development. Venezuela attempted to exploit gas there years ago, but the effort failed due to lack of funds and was marred by the sinking of an exploration platform in 2010.

Venezuela ultimately agreed in 2023 to allow Shell to develop the Dragon field. The rationale was that building a short pipeline to connect the field to Trinidad's existing infrastructure would be far cheaper than building new export facilities from scratch in Venezuela, which lacks gas export terminals.

A key reason this project is likely to proceed is that Venezuela must rely on its neighbor to bring the gas to market. This dependency provides a level of assurance for companies like Shell, as Venezuela cannot easily alter the terms or find alternative monetization paths as it might with oil. The Dragon field and another gas project near the maritime border with Trinidad are among the few new fields with significant potential for development in Venezuela over the next five years.

Another energy company, BP, stated this week that it is seeking U.S. permission to advance a second project named Cocuina.

Based on recent gas prices, if the Dragon field becomes operational, it could generate approximately $500 million in annual revenue. Government documents indicate that at least 45% of this revenue would go to Venezuela in the form of taxes and royalties.

However, progress on the project has been intermittent, caught between the two countries and ongoing U.S. policies that restrict Shell's operations.

These opportunities could potentially be launched within months, promising billions of dollars in investment and production in the coming years. However, such comments also serve as a reminder of the long cycles typical of oil and gas projects; even relatively advanced projects might not begin production for several years.

The U.S. administration has stated it is working towards fostering prosperity in Venezuela and ensuring energy companies can make unprecedented investments in the country. The U.S. Energy Secretary has also expressed support for developing Venezuelan natural gas, describing it as a potential win for Trinidad and Tobago, the global LNG market, and Venezuela itself.

Beyond U.S. sanctions, many details still need to be finalized with Venezuela, such as the specific methods Shell will use to extract the gas.

This will test the relationship between Venezuela and Trinidad, which hit a low point last year. After the Prime Minister of Trinidad and Tobago praised U.S. military actions in the region, Venezuela's National Assembly declared her persona non grata. The Venezuelan government subsequently stated it would cut off negotiations with Trinidad and Tobago and cancel gas contracts.

These developments led to pessimism regarding the future of joint gas development. The office of the Prime Minister of Trinidad and Tobago did not respond to inquiries, but the Energy Minister stated that his government had received no formal cancellation notice and remained optimistic.

Trinidad and Tobago is eager to access Venezuelan gas fields because its own domestic gas production is declining, dealing a heavy blow to an economy heavily reliant on fuel and related product exports.

Conversely, a significant portion of the natural gas Venezuela produces is wasted through leaks or flaring, exacerbating climate change. World Bank data shows that in 2024, Venezuela's gas flaring volumes were nearly on par with those of the United States, despite Venezuela's energy production being far lower.

Cooperation to jointly develop these gas resources is seen as being in the interest of all parties involved.

In western Venezuela, closer to Colombia, companies including Italy's Eni and Spain's Repsol are already extracting gas for use in Venezuelan power generation. Venezuela previously paid for this gas in oil, which the companies could then sell. However, the re-imposition of stricter U.S. sanctions blocked such payments. An Eni spokesperson stated that despite some eased restrictions, the company still cannot accept payment from Venezuela.

Eni also holds interests in Venezuelan oil fields and has expressed willingness to expand operations if it can resume receiving payments. Nevertheless, any increase in gas production in western Venezuela would be limited by the country's domestic consumption capacity. A pipeline connecting Venezuela to Colombia is in disrepair and would require significant investment to be usable.

The fundamental question remains: who will make the necessary investments?