By Ivelaw Lloyd Griffith – OilNOW
In the first article in this four-part series, I focused on Venezuela’s recent saber-rattling moves. In this 2nd part I turn attention now to stakes involved for the two South American nations.
The spotlight on Guyana as the world’s newest petro-power-in-the-making, Venezuela’s recent military moves related to its claim for the Essequibo territory, and the battle before the World Court over the territory provoke curiosity about the stakes involved for the two countries.
The stakes are high for both countries. For Guyana, retaining the claimed Essequibo territory, which gets its name after the river, is a life-or-death matter. One gets a sense of its existential nature for the Guyanese when it’s recognized that Venezuela claims all the territory west of the Essequibo River, which begins near the border with Brazil and runs 600 miles north to the Atlantic Ocean. The majestic Essequibo River, on which I’ve had the pleasure to travel on several occasions, is South America’s third largest river, after the Amazon and the Orinoco. Its estuary alone is 20 miles wide.
The Essequibo territory
The Essequibo comprises 61,600 sq miles of Guyana’s 83,000 sq mi, almost 75 percent of the country. It’s more than five-and-a-half times the size of Massachusetts. It could accommodate Jamaica fourteen-and-a-half times and Costa Rica three times. The territory holds six of Guyana’s 10 administrative regions, the equivalent of states or provinces in other countries, and some 300,000 of the country’s estimated population of just under 800,000, with a noteworthy amount of them being from various Indigenous groups. Guyana has nine distinct Indigenous peoples.
The dispute began in 1841, when Venezuela protested alleged British encroachment on its territory. In 1814, Great Britain had acquired then British Guiana by treaty with Netherlands. Because the treaty didn’t define the western boundary, the British commissioned German surveyor and naturalist Robert Schomburgk to delineate the boundary. Schomburg’s 1835 survey resulted in what came to be known as “the Schomburgk Line.” Venezuela disputed Schomburgk’s demarcation, claiming territorial delineations established at the time of their independence from Spain in 1810. They claimed their borders extended east to the Essequibo River.
The gold discovered in 1850s in the disputed area led Britain to seek to further extend its reach, claiming an additional 33,000 square miles west of the Schomburgk Line. Venezuela protested in 1876, broke diplomatic relations with Britain, and appealed to the United States for assistance, citing the 1823 Monroe Doctrine as justification for U.S. involvement. The United States even threatened war with Britain. With Washington’s encouragement, in 1897 Britain and Venezuela signed the Washington Treaty that took the matter to arbitration. The treaty contained a key provision: that the parties would consider the outcome of the arbitration “as a full, perfect, and final settlement of all the questions referred to the Arbitrators.”
The arbitration resulted in the October 1899 Paris Arbitral Award, which gave Venezuela the mouth of Orinoco River and a 5,000 square mile extension around Point Barima, and it gave Britain the land to the east extending to the Essequibo River. Decades later, in 1944, Severo Mallet-Prevost, one of the Venezuelan lawyers at the arbitration, penned a letter, which he asked to be opened only at his death. The letter, which was published in 1949, alleged collusion between the Russian president of the tribunal and the British members, which disadvantaged Venezuela. Even so, Venezuela accepted the 1899 agreement until 1962. As Guyana’s independence talks progressed, Venezuela informed the United Nations in February of that year that they considered a dispute to exist with Britain regarding the border with the soon-to-be-independent Guyana.
Oil and other resource abundance
The Essequibo holds considerable wealth, including oil, gold, diamond, bauxite, manganese, uranium, and other minerals, and timber. As well, it’s part of the Guiana Shield, which extends across the Guainía department of Colombia; Venezuela, where the Orinoco river makes the northern limit of the Shield; Guyana; Suriname; and French Guiana. Thus, the Essequibo has an abundance of biodiversity riches.
The massive oil discoveries since May 2015 raised the stakes to a new high for Guyana, which is now set to become among the world’s largest crude oil producers, with offshore deposits estimated at 9 billion barrels. Coincidentally, Venezuela began experiencing a meltdown in its oil industry around the same time. The Stabroek Block in Guyana, located approximately 120 miles offshore, is 6.6 million acres. While ExxonMobil takes the spotlight in relation to the discovery, the project involves a consortium that includes Hess Corporation and a unit of China’s National Offshore Oil Corporation.
The Hess Corporation is so confident about profitability in Guyana that on March 18, 2021 yahoo!finance announced its sale of $150 million of its Danish assets, intending to use the proceeds “to fund our world class investment opportunity in Guyana.” Earlier the same month, on March 3, 2021, ExxonMobil Senior Vice President of Upstream, Neil Chapman, told investors that the company’s acreage in the Guyana-Suriname basin is the largest of all the international oil companies. Meanwhile, companies from Britain, Canada, France, Israel, and Spain also are pursuing Guyana’s Black Gold bounty.
Gains for Venezuela
Venezuela calls the area Guayana Esequiba or zona en reclamación. Writing in the February 21st edition of the Caracas Chronicles, analyst Reybert Carrillo explains the sizeable, economic, strategic, and other gains Venezuela would acquire with possession of the claimed territory. For instance, it would obtain an extensive hydrographic network that includes the Essequibo River and its Atlantic delta, the Cuyuni, Rupununi, Mazaruni, and Supenaam rivers, as well as the Potaro River and its 741 ft Kaieteur Falls, which has the world’s largest single drop waterfall by the volume of water flowing over it.
Crucially, too, with almost 300 km of new coastland and over 40 km of ocean waters, the benefits would include customs taxes, fishing, and security, plus all the minerals in the Esequibo mentioned earlier. Indeed, the oil extraction and reserves in Guyana must have Venezuelans practically salivating, with some analysts speculating about the country’s willingness to step up its aggression. Writing in the January 25, 2021 edition of Oilprice.com, Viktor Katona posed the provocative question: Will Venezuela go to war over oil? My own sense is that although Venezuela outmatches Guyana militarily by a factor of more than 35 to one, wisdom will prevail in foregoing the military option; they will realize that the geopolitical and economic losses stand to far outweigh any military occupation gains.
So, Venezuela is anxious about reclaiming what it considers its stolen patrimony. Guyana, now in its 55th year of independence from Britain and on the cusp of moving into the economic stratosphere because of the abundant supply of its Black Gold, is experiencing existential anxiety although they never considered the territory to be in dispute. The stakes are high not just for the Guyanese leaders and people, though. The corporate executives and investors of ExxonMobil, Hess, Anadarko, CGX Energy, Ratio Oil, Repsol, Tullow and China’s National Offshore Oil Corporation must surely be anxious to avoid conflict that could disrupt their valued petro pursuits. I have every reason to believe they will not rely just on hope but will act appropriately to aid a peaceful resolution of the dispute.
About the Author
Ivelaw Lloyd Griffith is the Former Vice Chancellor of the University of Guyana, Senior Associate with the Center for Strategic and International Studies-CSIS and Fellow with the Caribbean Policy Consortium-CPC in Washington, DC. His next book, Challenged Sovereignty, will be published by the University of Illinois Press.