THE LAST OIL FIGHT
The world is awash in crude, but Venezuela and Guyana are battling over a new find,
For generations, Venezuela has formally laid claim to most of its tiny neighbour, Guyana. Many dismissed the case, given Venezuela’s oil wealth and Guyana’s penury. Hugo Chavez, long-standing president of Venezuela, even let it slide, referring to the Guyanese as his brothers.
Then, in May, Exxon Mobil Corp. revealed that under contract from Guyana it had found massive offshore oil and gas deposits. Chavez’s successor, Nicolas Maduro, demanded that the drilling stop because the area was Venezuela’s. He dismissed Guyana’s president as a tool of Big Oil, declared his statements “nauseating” and Guyana’s actions likely to “bring war to our border.”
He withdrew his ambassador, and Guyana announced the end to a longtime rice-for-oil deal.
For Guyana — which produces no oil and whose 800,000 inhabitants live with unpaved flooded roads and power outages — the estimated offshore find of 700 million barrels promises a revolution, a shift from negligible food exporter to global energy dealer. The combined oil and natural-gas deposits appear to be worth $53 billion, at least 10 times the country’s gross domestic product.
“We’ve gone through suffering for many decades and our time is due,” Raphael Trotman, minister of governance, said in an interview in his office on an unassuming road in the capital, Georgetown. The discovery is “transformational,” he said. “For us, there is no going back.”
Ordinary Guyanese, who rely on Venezuelan oil, are giddy with anticipation. Staring at a potential jackpot, they also are livid with Maduro, accusing him of trying to evade his economic and political woes by coveting what belongs to them.
“Chavez never fought and now Maduro?” said Otis Adams, a 42-year-old heavy-machine operator in the destitute border town of Mabaruma. “He’s a nobody, trying to pass off the worry of his people from all that killing and suffering — he’s just being greedy.”
Venezuela has the world’s highest inflation, chronic shortages of consumer basics, including medicine and toilet paper, and a murder rate that surpasses Iraq’s. Parliamentary elections are slated for December, and Maduro’s socialist coalition may lose its majority for the first time in 16 years.
“Why so suddenly?” Charlie Bees asked about the renewed claim to large swaths of his country. “Maduro is losing votes,” explained the 52-year-old currency trader working near Georgetown’s port.
It may seem to the Guyanese like a mere political diversion, but their president, David Granger, says Venezuela is causing real trouble.
“Investors have been intimidated, development has been derailed, projects have been obstructed,” he said in a speech in Washington last month. “It is too much to bear for a country that has less than a million people.”
Rather than halt its exploration activities, Guyana is moving forward, Foreign Minister Carl Greenidge said. The government expects it will take five to seven years for the first production.
Venezuela’s claim on Guyana’s land a century ago had a very different feel. It was a British colony until1966; its citizens speak English and are descendants of African slaves, indentured Indian labourers and native peoples. In 1899, an international tribunal in Paris granted the disputed region, known as the Essequibo, to Guyana; Venezuela rejected the ruling. It amounts to two-thirds of Guyana, which has been developing it with occasional outbursts from Venezuela.
To be sure, gaining possession of Es- sequibo has long been a matter of national pride for Venezuelans, whose maps denote the area a “reclamation zone” drawn with dashed lines.
And despite having the world’s largest oil reserves, Venezuela has struggled to increase production, with output falling.
There is an additional issue: Exxon is trying to collect a $1.6-billion award ($2.1 billion Canadian) from Venezuela, granted by a World Bank tribunal after Chavez nationalized a number of its assets. So there is also no love lost between Exxon and the Maduro government.
Last month, Maduro met with United Nations Secretary General Ban Ki-moon to ask for help. The Association of Caribbean States has sided with Guyana, as has Britain and the rest of the Commonwealth. Venezuela has been seeking backers for a negotiated settlement that could take a long time.
Guyana has “strong international support,” said Carlos Romero, professor of international relations at the Central University of Venezuela. While Venezuela wants mediated negotiations, Guyana prefers a tribunal where it probably will find a sympathetic hearing.
Maduro insists military action is out of the question. As a result, Romero said, “Maduro is against the wall.”