However, the central problem is not only oil, but also the geopolitical position of the United States in Guyana and the incapacity of the current regime to exploit and boost oil production in the middle of the catastrophic deterioration of the Venezuelan economy.
In 2021, Venezuela’s oil production was 650,000 barrels per day, 70% less than in 2017, from more than three million that it processed in less than 12 years.
It is forecast that by the end of 2027, Guyana will process more crude oil than Venezuela: 1.2 million barrels per day.
Oil in the disputed area
Essequibo, a territory of 160,000 km2, is administered by Guyana, but Venezuela claims it by defending the limits of its time as a colony of Spain. The struggle was revived when in 2015 the American energy giant ExxonMobil discovered enormous reserves of crude oil in the area.
Guyana, with 800,000 inhabitants, was left with estimated reserves of 11 billion barrels of crude oil, the highest per capita in the world.
Exxon has developed 63 drilling projects in the “Stabroek” block, which have led Guyana to increase production to 600,000 barrels per day (bd), a figure that in 2027 should reach 1.2 million bd.
The government of dictator Nicolás Maduro has denounced that this oil operation is carried out in waters to be delimited and calls the Guyanese president Irfaan Ali a “slave” of ExxonMobil.
Maduro, under almost unsustainable social pressure due to the tripled levels of extreme poverty in the country, is now trying to divert attention from an international conflict, in the same style as Fidel Castro when the social explosion valve is on the verge of bursting.
The problem is not Guyana or Guyana’s oil, the serious problem is the current socialist government in Venezuela that Has destroyed practically the entire Venezuelan oil production infrastructure very similar to what Castroism caused in Cuba in the sugar industry.
And it persists along with a slight improvement thanks to the window opened by Joe Biden’s administration, which authorized Chevron to operate in Venezuela at the end of November 2022. In October of this year, Biden also decides to offer greater concessions and lift some sanctions on Venezuelan oil, gas and gold.
The nation with the largest reserves of the best crude oil in the world due to its natural composition cannot increase its oil production due to lack of investment, corruption, terrible administration and decades of poor maintenance, the great failure that began with the era of Hugo Chávez.
The conflict with Guyana is to make Maduro look like a defender of Venezuelan interests, when between him and Chávez they have destroyed everything, and especially the economic power of the South American country practically in ruins and with hyperinflation in 2022 of 306% .
Venezuela has the largest proven reserves of crude oil, 300 billion barrels, but its oil industry is currently facing deep problems after years of mismanagement, corruption, a socialist system of government and economic sanctions.
Its production, in just over a decade, fell from more than 3 million barrels per day to 750,000 barrels per day, but
Are there risks of escalation?
After a consultative referendum on December 3, which approved the creation of a Venezuelan province in Essequibo, Maduro ordered the state oil company PDVSA to create subsidiaries to grant permits for the exploitation of oil, gas and minerals in the area under claim.
The president also gave a period of three months to companies that work with Guyana to withdraw from the area and negotiate with Venezuela.
Maduro knows perfectly well that a military escalation in Guyana is the end of his misrule, because it would directly attack the geopolitical interests of the United States in the region; something that the ruler does not intend to do even in jest.
Firstly, the Venezuelan dictator does not have the financial resources to open a military conflict. The thing is that without the support of Russia, China and Iran he would not be able to produce or sell oil right now. The Venezuelan economy is totally devastated and billions of dollars would be needed to lift it in the long term, without going into details of the moral erosion among Venezuelans due to decades of government control and dependence that has led more than 80% of the population to poverty.
The current debate on Essequibo is a new show by Maduro to divert attention from the current serious unsolved problems of Venezuelans and create a mini-front of popular support, where not even the majority of Chavistas want him in power.
Ali considered the announcements a “direct threat” to Guyana’s security, while a licensing order from Venezuela is absolutely difficult to execute.
“It’s rhetorical,” says lawyer specialized in international litigation Ramón Escovar León.
“On paper the license can be granted, but execution is not guaranteed,” says De Alba, who believes that Maduro, deep down, seeks to force a negotiation with Guyana and the United States. In this case the probabilities are almost zero, say political analysts.
“Any attempt at oil exploration by their state oil companies or companies in our territory will be seen as an incursion into Guyana,” warned Guyanese Vice President Bharrat Jagdeo.
“Ignore Maduro,” Jagdeo said. “They should not take into account Maduro or his ultimatum (…) Companies operate legally.”
Guyana has the support of Washington and feels protected, while Maduro’s threats remain merely an obsolete verb of intimidation.
US and Chinese interests
Although the international community is concerned about the escalation of tensions, experts do not see it likely that the situation will escalate into an armed conflict.
The United States is focused on its oil supply in the medium and long term, and has every interest in this area, which is very close and contains the largest deposits in the world, remaining stable.
Escovar León believes that the costs of escalation are high for Venezuela due to the interests of Guyana’s allies such as the United States in the concessions granted by Georgetown. These advocate, as the Guyanese government maintains, to resolve the dispute in the International Court of Justice (ICJ), whose jurisdiction in the case Caracas does not recognize.
On the other hand, China has a 30% share in the concessions awarded by Guyana. Maduro would never go against that, much less with Washington as the axis in the conflict and which has already sent a message: the announcement of military exercises by the US Southern Command in Guyana, seen as a “provocation” by Maduro’s socialist regime.
(email protected)
Source: With information from AFP and other sources.
