GUYANA: Will Venezuela Go To War Over Oil? – By Viktor Katona for Oilprice.com 

By Viktor Katona for Oilprice.com 

Jan 25, 2021 (Baystreet.ca via COMTEX) — January 2021 is still far from over, yet the pages of Oilprice already boast 6 articles about Guyana being the hottest drilling spot in the world.

This is hardly surprising, considering the hot streak that ExxonMobil had over the past 5 years, with new companies coming in and stepping up the drilling game. The interest globally attributed to Guyana has aggravated Venezuela’s long-standing grievances over the disputed Essequibo province – before 2015 the Venezuela vs Guyana oil standoff was akin to a David vs Goliath story but now, with Guyana building up its oil reserves tally and continuing to attract new investors, the balance has become a lot more nuanced.     

Amidst All of This, Venezuelan President Nicolas Maduro Has Pledged To Reconquer Essequibo.

At first glance, the proposition that Venezuela should go to war over a disputed territory, let alone with Guyana, seems rather dubious. Venezuela boasts the world’s largest proven oil reserves, totalling roughly 304 Bbbls, i.e. more than all of North America combined, more than Iraq and Iran combined.

GUYANA’S RESERVES ARE A FRACTION OF VENEZUELA’s, BARELY REACHING 3% WITH ITS 9-10 Bbbls.

However, behind the dry facade of data and statistics, there lies an entire universe of human emotions, oftentimes led astray due to their subjective nature and in this particular realm, Caracas is the one frustrated and concerned. Guyana is adding one major discovery after another – the recent failure of Hassa-1 notwithstanding – whilst the Venezuelan national oil company PDVSA keeps on struggling to make ends meet. 

The dispute over Guayana Esequiba – alternatively dubbed the Essequibo Region – is one of the most complex remaining, mixing colonial legacies with modern-day grievances. It all began in 1840 when the British Empire demarcated the heretofore undisputed and unsettled frontier between British Guiana and Venezuela, by means of the “Schomburgk Line”.   

To no one’s surprise Venezuela rejected the British claim, however, unwilling as they were to get mired in a protracted conflict, both sides agreed to disagree in 1850 and vowed not to colonize the then-largely uninhabited region.

Despite arbitrations and negotiations, the question of who should control the Essequibo Region remained unsolved by the time Guyana was declared independent in 1966. Caracas recognized the independent Guyana, HOWEVER ONLY ITS TERRITORIES LOCATED TO THE EAST OF THE ESSEQUIBO RIVER, maintaining its claim that all the territories to the west are part of Venezuela. 

One of the most protracted territorial disputes globally, the discovery of oil offshore Guyana might have been the factor missing to propel the issue forward. ExxonMobil, the operator of Guyana’s Stabroek offshore block, was subject to maritime harassment by the Venezuelan Navy and had one of its surveying vessels detained in 2013. However, when Exxon discovered the Liza field in 2015, closer to the Guyanese-Surinamese frontier and hence were beyond the Venezuelan maritime claim, the stakes turned really high. Guyana had official proof that its offshore was not sub-commercial as was previously thought – initially companies appraised the shallow waters of Guyana and found no commercial deposits – and with the help of a US major could now count on high-level backing for its border case.

With every new discovery on the Stabroek block, Venezuela’s opposition to Guyana taking the east bank of the Essequibo River was becoming increasingly untenable. Concurrently, the good neighbor relations of the Chavez era when Guyana was member to the continent-wide Petrocaribe movement and even participated in barter deals to satisfy its crude needs, went downhill fairly quickly. 

Yet there is another factor that most certainly contributed to Caracas now striking such a belligerent tone – US SANCTIONS AGAINST VENEZUELA. Not only did the tightening of screws on President Maduro’s political allies and relatives blunt the political prospects of Juan Guaido, it also led to the entry of Venezuela’s military into the Latin American country’s oil industry. At least, the military faction that remained loyal to Maduro amidst the worst humanitarian suffering in Venezuela.

Any future US administration will most probably seek to safeguard ExxonMobil’s assets in Guyana. A first sign of this – in the first days of 2021 the commander of the US Southern Command arrived in Guyana for a 3-day visit, to celebrate the launch of joint US-Guyanese coast exercises. According to top-ranking officials in the Guyanese army, Georgetown is intent on fortifying its military ties with the United States, including but not limited to arms purchases. Concurrently, Venezuela formed a new parliament which will no longer be controlled by the Guiado-style opposition – the pro-Maduro National Assembly will inevitably become more aggressive in its narrative and overall behavior. Part of the aggression might result from the UN Court of Justice’s ongoing review of the Essequibo case, the decision of which was already declined by Caracas before its actual deliverance.

So, Will There Be War Between Venezuela And Guyana? Such a scenario seems unlikely for now. 

FIRST, Maduro might wait to see what the new Biden Administration has to offer, how will it tackle the Venezuelan conundrum. SECOND, there is very little reason to heat up tensions now, when no final decision had been taken, the peak of confrontation should be around 2023/2024 when the ICJ is assumed to deliver its opinion on the legal status of the Essequibo Region. THIRD, even if the ICJ rules in favor of Guyana which seems quite likely, Venezuela remains unlikely to trigger a military response, for fear of actual US retaliation.

It is one thing to foil an amateurish coup attempt by a private military company – Operation Gideon in May 2020 – quite another and altogether different one to deal directly with the US military. 

Note: The MarketWatch News Department was NOT involved in the creation of this content.

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Comments

  • guyaneseonline  On 01/27/2021 at 12:18 am

    Venezuela’s Foreign Minister working on early release of abducted Guyanese fishermen
    Jan 27, 2021 News

    Kaieteur News – Venezuela’s Foreign Minister Jorge Arreaza has promised to pursue early release of Guyanese fishermen, vessels detained in Venezuela for the last five days.

    This is the latest development in the attempts by the government to have the 12 Guyanese fishermen and their vessels released from the custody of the Venezeulan authorities.

    The men and their vessels have been detained since last week Thursday despite calls from the Guyana Government for their release.

    Since their detention, Guyana Foreign Minister Hugh Todd has engaged in virtual dialogue with his Bolivarian counterparts.

    In a recent statement to the press, Todd related a virtual meeting with the Venezuelan Minister of the People’s Power for Foreign Affairs was cordial.
    He noted that Arreaza undertook to pursue the early release of the men, Guyana’s Foreign Ministry noted.

    “The Foreign Ministers exchanged views within the context of the detention of the vessels and crew,” the statement added.
    The Venezuelan Foreign Minister assured that the crew members were being treated with utmost respect for their human rights, the statement added.

    Earlier on Monday, Todd dispatched a note of protest to the Venezuela authorities. Todd summoned the Chargé d’ Affaires of the Embassy of Venezuela, Mr. Moses Chavez, to transfer the protest note from the Ministry of Foreign Affairs of Guyana to the Ministry of Foreign Affairs of Venezuela.

    The protest note firmly condemns the illegal detention of the captains and crews of the Guyanese registered fishing vessels, the Lady Nayera and the Sea Wolf and calls for their immediate release.

    Minister Todd used the opportunity to voice his concerns on the matter; he said that, “the action coming out of Caracas is distasteful.” The Minister added that based on latitude and longitude, the two vessels were well within Guyana’s territory.”

    The Foreign Minister highlighted the regional zone of peace and called for Venezuela to operate in a manner consistent with international rule of law. He reiterated Guyana’s commitment to the International Court of Justice (ICJ) as a means of bringing to a close the Guyana/Venezuela border controversy.

    On Thursday, January 21, 2021, the two vessels were intercepted by Venezuelan naval vessel Commandante Hugo Chavez GC 24, while operating off the coast of Waini Point at a position of N 80 49’ 06”/ w 590 37’ 40” W. The Government of Guyana is using all diplomatic channels to ensure the safe return of the crew and vessels to Guyana.

  • kamtanblog  On 01/27/2021 at 1:06 am

    Simple Simon suggests
    Politicians stick to their politricks !
    Military stick to their war tricks !
    Economists stick to economics

    There is a diplomatic solution.
    No man is an island
    No man is an ocean
    Island or ocean belongs to no one.

    Article long on words
    Short on solution

    Kamtan uk🇬🇧

  • Clyde Duncan  On 01/27/2021 at 1:44 am

    kamtanblog: The essay was intended for investors ….

    People who want to invest and make money …..

    As the author pointed out: “……before 2015 the Venezuela vs Guyana oil standoff was akin to a David vs Goliath story …..”

    TODAY, Guyana found a bigga hamma …. an equalizer?!!

    That’s qualified information for investors!!

  • Clyde Duncan  On 01/27/2021 at 11:43 am

    Ernesta wrote:

    Guyana does not have a proper army, they will surely be overwhelmed by Venezuela’s well trained and equipped military.

    Their only hope is from outside help, mainly the US who they constantly indicate they want them to ‘stay out of Guyana’s business’ until it suits their needs.

  • Clyde Duncan  On 01/27/2021 at 11:58 am

    Eddie in the UK wrote:

    All this is nonsense talk. Venezuela like the earlier colonisers need to come to terms with the reality that none brought land with them when they entered into this life, and none therefore has any divine right to claim what they did not create nor own.

    Engaging in false narratives has been the absurdity surrounding this issue.

    Whoever wishes to be contentious should be made to prove how any part of this Earth, which has been here before everyone, is rightfully owned by them.

  • Clyde Duncan  On 01/27/2021 at 12:00 pm

    Eddie: If you want to go down that road – the First Nation Peoples …

    The land is they own.

  • Clyde Duncan  On 01/27/2021 at 12:22 pm

    Brother Peter wrote:

    Maduro is just throwing dust in the air. Venezuela can’t afford a war.
    Grabbing a few fishing boats makes him look macho.
    Let him try grabbing an oil rig or tanker.
    The Essequibo is too vast a territory for him to invade and hold onto.

    Don’t lose any sleep over the saber rattling.

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