Sanctions Loosened: Why Is the U.S. Allowing Trinidad & Tobago to Negotiate With Venezuela?

Washington DC - October 9, 2025 – In a significant easing of tensions over energy diplomacy, the United States has granted Trinidad and Tobago a new Office of Foreign Assets Control (OFAC) license, permitting the Caribbean nation to negotiate a cross-border gas development deal with sanctioned Venezuela. The move, announced this week, revives the long-stalled Dragon gas field project and underscores Washington's balancing act between regional energy security and its hardline stance against the Maduro regime.

The license, issued by the U.S. Treasury Department on Wednesday, provides a six-month window for initial negotiations on the Dragon field—located in Venezuelan waters just across the maritime border from Trinidad and Tobago. It allows Trinidadian officials and companies to engage in transactions otherwise prohibited by U.S. sanctions, but with strict conditions: the deal must meet "reasonable commercial targets" set by U.S. authorities to ensure no significant benefits flow to Venezuelan President Nicolás Maduro's government. Successful talks could lead to gas exploitation and exports to Trinidad by 2027, bolstering the island's dwindling natural gas reserves amid fiscal pressures where government spending outpaces revenue.

The green light follows high-level talks between U.S. Secretary of State Marco Rubio and Trinidad and Tobago Prime Minister Kamla Persad-Bissessar. Rubio met with Persad-Bissessar in Washington on October 7, outlining U.S. support for the project while emphasizing safeguards against regime enrichment. A prior meeting on September 30 had laid the groundwork, with Rubio signaling a policy shift after the new license request in May. This comes after the U.S. revoked a previous OFAC license for the Dragon project in April 2025—originally granted in October 2023 and set to expire October 31, 2025—along with another for the Cocuina-Manakin field in May 2024, citing concerns over Venezuelan compliance with democratic commitments.

Trinidad and Tobago's United National Congress-led government, which took office on April 28, 2025, had initially shelved the deal initiated by the prior People's National Movement administration. However, facing an energy crunch that threatens its petrochemical industry and LNG exports, the Persad-Bissessar administration pivoted, securing a 30-year exploration license from Venezuela on December 21, 2023. Key players include Shell plc and Trinidad's National Gas Company (NGC), which hold development rights and stand to benefit from the humanitarian carve-outs allowing payments in multiple currencies.

"This license is a game-changer for our energy security and economic stability," said Trinidad and Tobago Attorney General John Jeremie in announcing the approval. He cautioned that commercial details and negotiation timelines with Caracas remain confidential for now. Critics, including former Energy Minister Stuart Young, have accused the government of inconsistency, arguing the project's success hinges on respecting Venezuelan sovereignty while navigating U.S. red lines.

The Dragon field holds an estimated 4.3 trillion cubic feet of recoverable gas, enough to extend Trinidad's production life by years and support regional stability. U.S. officials, including State Department Principal Deputy Spokesperson Tammy Pigott, framed the support as advancing bilateral ties on security, counternarcotics, and Haiti stabilization, while aligning with broader efforts to diversify Caribbean energy away from reliance on volatile suppliers.

As negotiations kick off, the deal tests the fragile détente in U.S.-Venezuela relations, where sanctions relief has been doled out incrementally since 2023 in exchange for electoral promises. For Trinidad and Tobago, it's a high-stakes bet on bridging borders—literally and figuratively—to fuel its future.