Exxon's $40b oil dis­cov­ery sparks a nasty feud

The Pak Banker - - COMPANIES/BOSS -

For gen­er­a­tions, Venezuela has for­mally laid claim to most of its tiny neigh­bor, Guyana. Many dis­missed the case, given Venezuela's oil wealth and Guyana's penury. Hugo Chavez, long­stand­ing 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 long-time 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 $40 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 42year-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 in De­cem­ber, and Maduro's so­cial­ist coali­tion may lose its ma­jor­ity for the first time in 16 years.

"Why so sud­denly?" asked Char­lie Bees, about the re­newed claim to large swathes 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, Guyana's for­eign min­is­ter, Carl Greenidge, said in an in­ter­view. The gov­ern­ment ex­pects it will take five to seven years for the first pro­duc­tion.

"We call upon the in­ter­na­tional com­mu­nity to help us de­velop within the in­ter­na­tion­ally rec­og­nized borders, peace­fully and with­out the bur­den of a neigh­bor whose ac­tions serve to im­pov­er­ish us and whose claim is based on what hap­pened 200 years ago."

Ed­ward Glab, who teaches at Florida In­ter­na­tional Univer­sity in Mi­ami and worked at Exxon for 25 years, said the find was clearly of ma­jor sig­nif­i­cance for Guyana, even with oil down to $50 a bar­rel.

"You could have in­vestors try­ing to get ahead of the curve be­cause they fig­ure at some point there is go­ing to be huge wealth in the coun­try," he said. "They might be able to take risks, count­ing on the fact that the coun­try will be able to pay its bills."

Venezuela's claim on Guyana's land a cen­tury ago had a very dif­fer­ent feel. It was a Bri­tish colony un­til 1966; its cit­i­zens speak English and are de­scen­dants of African slaves, in­den­tured In­dian la­bor­ers and na­tive peo­ples. In 1899, an in­ter­na­tional tri­bunal in Paris granted the dis­puted re­gion, known as the Esse­quibo, to Guyana; Venezuela re­jected the rul­ing.

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