The global energy industry is anxiously waiting to see what happens next in Guyana with Venezuelan President Nicolas Maduro having staged a Dec. 3 national referendum in which he says 95 percent of his countrymen approved invading Guyana and taking ownership of its booming oil and natural gas reserves.
Answering an appeal by Guyana President Irfaan Ali, the International Court of Justice in The Hague, The Netherlands, ruled before the referendum that Venezuela shouldn’t do it.
“The court observes that the situation that currently prevails in the territory in dispute is that Guyana administers and exercises control over that area,” Presiding Judge Joan Donoghue said. “Venezuela must refrain from taking any action which would modify that situation.”
Recently in Odessa, U.S. Sen. John Cornyn cited two sources to reflect his position.
In a retweet on X (formerly Twitter), Cornyn noted that the Washington-based United States Oil & Gas Association had just issued a news release saying, “Six weeks ago President Biden lifted U.S. sanctions on Venezuelan crude oil if Maduro would agree to play nice, but the administration apparently forgot to include the clause saying, ‘Don’t annex your neighbor and take their oil!’”
The Texas Republican said Giovanni Staunovo, a global oil market analyst in Zurich, Switzerland, had reported Dec. 6 that Venezuela just gave ExxonMobil and other offshore producers 90 days “to stop operations in disputed waters off the coast of Guyana.”
Waco economist Ray Perryman says the territorial dispute “has been going on for a century, but the recent oil discoveries have provided a catalyst for Maduro’s actions at this time.
“The economic situation in Venezuela is extremely difficult and the quality of life for many of those in the country has declined markedly under Maduro’s regime,” Perryman said. “There has been evidence of issues with prior Venezuelan elections and Maduro’s claim of 95 percent voter approval of taking back the disputed territory could well be erroneous.
“However, the severity of the problems could also be contributing to the people’s apparent willingness to embrace almost any change.”
ExxonMobil is heavily invested in the offshore Stabroek Block field with the French company Total and Guyana’s Sispro company.
Perryman said that even with vast oil and gas reserves Venezuela’s lack of investment in and maintenance of the necessary infrastructure have led to declining production.
“The new fields off the coast of Guyana, however, are among the largest new finds in recent years,” he said. “Although the new discovery would increase supplies over time if it were fully developed, production is still ramping up and a disruption would be unlikely to cause a notable shift in the current market dynamics.
“With Venezuela claiming about two-thirds of Guyana’s land area it is difficult to see a simple path to a resolution of the conflict,” the economist said. “With increasing geopolitical risk in the area the international companies developing the Guyana industry will face difficult choices and a greater risk premium on continued investment in the area. The end could well be a lose-lose with development stalling.
“On the other hand, the world will ultimately need the oil and the recent acquisition of Hess, which has enormous shale reserves in Guyana, by Chevron indicates that long-term production patterns will increase.”
