Guyana, home to the world’s biggest oil discovery in decades, appears to be one of the first beneficiaries of US President Donald Trump’s ouster of Venezuelan dictator Nicolás Maduro.
The operation carried out by American forces a week ago to arrest Maduro also virtually neutralized the long-standing threat that the Venezuelan government posed to Guyana’s sovereignty.
Tensions between the South American neighbors date back to the 19th century. Exxon Mobil Corp.’s massive oil discoveries. on the coast of Guyana a decade ago, led Maduro to reignite a century-old border dispute.
While his threats to annex two-thirds of Guyanese territory did not stop Exxon’s crude oil extraction operations, they increased the physical and financial risks for companies considering exploring for oil in the region.
Venezuelan claim
At least for now, Maduro’s capture puts an end to the South American nation’s territorial claims over its smaller neighbor, according to analysts including Dan Pickering, chief investment officer at Houston-based investment bank Pickering Energy Partners LP.
“This substantially reduces the geopolitical risk to Guyana from any future conflict with Venezuela,” said Amy Myers Jaffe, director of the Energy, Climate Justice and Sustainability Laboratory at New York University.
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It is possible that the border dispute was “an important factor in how the US thought about how to deal with Venezuela.”
Contrasts
Venezuela and Guyana are a study in contrasts. The former was once an oil-exporting powerhouse with a prosperous economy, before its energy sector was devastated by more than two decades of mismanagement and corruption under Maduro and his predecessor, President Hugo Chávez.
Meanwhile, within a few years, Guyana—a much smaller nation, initially much poorer but also more politically stable—developed the world’s fastest-growing economy as Exxon and other international operators focused on its offshore oil reserves.
Guyanese President Irfaan Ali welcomed the US removal of Maduro, which he said reaffirms Trump’s commitment to “regional security”.
Maduro, who is jailed in New York awaiting trial on drug trafficking, conspiracy and weapons charges, has sought to revive a 19th-century dispute with Britain over the Essequibo region, which encompasses much of present-day Guyana.
The issue was resolved in favor of the United Kingdom in an 1899 arbitration ruling that established the borders of Guyana, a country that gained independence in 1966. In response to Maduro’s belligerence, Guyana asked the International Court of Justice to confirm the 1899 arbitration award.
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The threat of annexation, however, has led Guyanese authorities to delay exploration approvals in waters near the border with Venezuela in recent years.
Dispute
Maduro, who is jailed in New York awaiting trial on drug trafficking, conspiracy and weapons charges, has sought to revive a 19th-century dispute with Britain over the Essequibo region, which encompasses much of present-day Guyana.
The issue was resolved in favor of the United Kingdom in an 1899 arbitration ruling that established the borders of Guyana, a country that gained independence in 1966. In response to Maduro’s belligerence, Guyana asked the International Court of Justice to confirm the 1899 arbitration award.
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The threat of annexation, however, has led Guyanese authorities to delay exploration approvals in waters near the border with Venezuela in recent years.
“Risk-adjusted returns have improved in Guyana because Venezuela will no longer interfere,” Pickering said. “Guyana wins even if there is no change” in real oil production.
Exxon operates the Stabroek Block in Guyana and holds a 45% stake. Chevron Corp. and the Chinese CNOOC Ltd. hold stakes of 30% and 25%, respectively.
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“Future disputes surrounding Guyanese offshore oil, which have implications for Exxon and Chevron, are marginally mitigated,” TD Cowen analysts wrote in a note to clients dated January 5.
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