Guyana: Dispute with Venezuela will not threaten the 'oil boom'

South America and its oil deposits have been the source of many problems in the past. More recently, the Essequibo region has frequently made headlines as disputed territory between Guyana and Venezuela. In practice, the territory falls under Guyana’s control and accounts for as much as two-thirds of its land area. Venezuela recently threatened to annex it, and a referendum on support for the move was also held in the region. However, legitimate doubts were raised about its credibility. Representatives of both countries met in recent days to resolve their dispute.

The Essequibo region covers 159 000 square kilometres around the river of the same name. Relatively recent exploration in Guyana has uncovered extensive oil reserves of approximately 11 billion barrels. This has suddenly propelled Guyana, formerly a poor country where tens of per cent of the population lived below the poverty line, into the ranks of the world’s fastest-growing economies.

At the same time, the aforementioned cross-border dispute with neighbouring Venezuela was and remains ongoing. Its origins are dated as far back as the 15th century by some sources, making it largely a legacy of the colonial past.

December’s events first brought a ruling by the International Court of Justice, which backed Guyana’s request. A few days later, Venezuelan President Nicolas Maduro announced a referendum on claiming sovereignty over the Essequibo territory. However, according to the latest reports, the two sides are moving towards reconciliation. Nicolas Maduro met with Guyanese President Mohamed Irfaan Ali, and the talks resulted in an agreement to resolve the dispute peacefully.

Guyana also has abundant oil reserves in its adjacent waters. In 2015, multinational corporation and oil giant ExxonMobil entered the picture. According to the BBC, Guyana ranks among the world’s top 20 countries in terms of its oil reserve potential. It is listed alongside Algeria, Brazil and Norway. This small country is experiencing an “oil boom”, making its economy one of the fastest-growing in the world.

For offshore production, the Stabroek block is Guyana’s primary oil field. Three projects are underway there: Liza Destiny, Liza Unity and Payara, all operated by ExxonMobil. In 2021, approximately 42 million barrels of oil were produced there. The following year, after the Unity project came online, production more than doubled to over 100 million barrels.

Its accelerating ambitions are underscored by the goal of bringing a total of 6 projects online in the Stabroek block, which are expected to reach a combined production capacity of more than 1,2 million barrels per day.

It therefore appears that the cross-border dispute with Venezuela will not disrupt the enormous momentum Guyana has built up over the past few years. After all, ExxonMobil issued a statement in response to events, saying it is continuing all its projects and intends to increase production efficiently as planned. The company thus reaffirmed its “long-term commitment” to the Guyanese government. The day before, President Ali had encouraged investors not to hesitate to invest in Guyanese projects.