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Shell wins bid for key gas block in Trinidad and Tobago

Trinidad and Tobago chooses Shell to operate the Modified U(c) offshore gas block, reinforcing its strategy of stabilizing liquefied natural gas (LNG) supply in the face of declining domestic production.

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The government of Trinidad and Tobago recently named Shell as the leading bidder to develop the Modified U(c) shallow water block.
This block is one of 13 areas proposed in an auction aimed at boosting the country’s natural gas production.
With a steady decline in gas extraction in recent years, the country is struggling to supply its liquefaction facilities (LNG) and petrochemical plants, which are crucial to its economy.
The total capacity of the 13 offshore blocks is estimated at 13.4 trillion cubic feet of gas, a volume essential to compensate for the current drop in production.

Competition between major gas players

The Modified U(c) block was one of the most coveted, with Shell, BP and EOG Resources submitting bids.
However, it was Shell who was selected by the government for this crucial project.
The block lies close to gas fields already in production, reinforcing the strategic importance of this area for the country’s energy security.
Other companies, such as BP and EOG Resources, submitted bids for other blocks, notably NCMA (2) for BP, and Lower Reverse L for EOG.

Atlantic LNG’s key role

As a major shareholder in the Atlantic LNG project, Shell plays a central role in maintaining Trinidad’s gas exports.
The Atlantic LNG project, with an annual capacity of 15.3 million tonnes, depends on the country’s gas supply to continue operating at full capacity.
Declining domestic production has already led to reductions in activity, making new offshore projects like Modified U(c) even more essential to stabilizing supply and sustaining exports.

Tax reforms to attract investment

To strengthen the interest of oil and gas companies, the Trinidadian government has introduced major tax reforms.
These include a reduction in the windfall profits tax and an extension of exploration periods from six to eight years.
In addition, bidding fees have been reduced, a move designed to stimulate investment after disappointing results in previous auctions.
This strategy seems to be paying off, with companies like Shell ready to invest in these crucial offshore blocks.

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