Guyana, Venezuela dispute hinders oil exploration

Regional geopolitics have come to the fore as territorial tensions between Guyana and Venezuela continue to flare, potentially compromising further oil exploration, energy expert Anthony Paul has suggested.

“The whole issue is the boundary and who owns the maritime area,” Paul told Newsday. The dispute has been ongoing for over a century, with Venezuela claiming all land east of the Essequibo River. Last week, a vessel contracted by Exxon to conduct seismic surveys in waters claimed by Guyana was intercepted by the Venezuelan navy and forced to stop its work. The US, Caricom and Guyana have condemned the move. “I have not looked at it in detail but some people believe (the ship) was not in the contested area. The offshore/maritime boundary is not settled so if one considers the current boundaries as the world sees it then it’s in Guyana’s boundaries,” Paul said.

There are different parts to the business at hand, he said, mainly that Exxon has now stopped its exploration programme in terms of the seismic survey. Activity has slowed down and that block has significant exploration potential. With the vessel down, Exxon isn’t adding reserves, he said. Exxon has already estimated its discoveries in Guyana to be about five billion barrels. Production is expected to begin in 2020. International news agency, Reuters, reported on Wednesday that Exxon said it will continue to drill in the southeast area of the Stabroek Block, well out of the disputed “zone of reclamation.” Exxon, Reuters reported, declined to say if the survey would continue.

Exxon is not the only stakeholder, Paul noted, but has a partnership with American oil company Hess Corporation and Canadian energy company Nexen. Hess, in particular, has a lot riding on the success of Guyana, he said. Hess shares took a hit on the back of the incursion (but has since rebounded), but they have sold assets and invested heavily in Guyana, banking on the returns from the comparatively low cost of production in Guyana. “The situation is a challenge for them,” he said. Exxon, on the other hand, is one of the biggest lobbyists in Washington DC.

TT has always been a broker in the Guyana-Venezuela territory negotiations, even facilitating the Port of Spain protocol in 1970, where Venezuela agreed on a moratorium on its claim. That deal expired in 1983 and Venezuela declined to continue, reinstating its claim for the Guyana Essequibo region. In 2013, Venezuela had also detained a survey vessel doing oil exploration on behalf of the Guyanese government. In 2018, the United Nations referred the border dispute to the International Court of Justice.