Trinidad and Tobago selected oil and gas producer Shell (SHEL.L), opens new tab as the preferred bidder for a shallow water block, beating out bids from BP (BP.L), opens new tab and EOG Resources (EOG.N), opens new tab, three people close to the process said.

Trinidad and Tobago has in recent years struggled to feed its liquefied natural gas and petrochemical plants as its natural gas production declines. The government has organized bidding rounds while pressing producers to deliver first output from offshore projects.

Shell and BP are the two largest shareholders in Trinidad's flagship 15.3 million tons per annum Atlantic LNG project. They have been trying to boost output to secure feedgas for the liquefaction trains.

Shell is in negotiations with the government on terms for working on the Modified U(c) block, the most contested of 13 areas offered by the Caribbean country's government in a shallow water auction last year, the people said.

The 13 areas collectively hold estimated resources of some 13.4 trillion cubic feet of gas, according to official data.

Shell and BP declined to comment. Trinidad's government and EOG did not immediately reply to requests for comment.

As part of the shallow water auction, which closed in May, EOG was the sole bidder for the Lower Reverse L block and NCMA 4(a), while BP was the sole bidder for NCMA (2).