Page 5 - LatAmOil Week 04 2021

LatAmOil COMMENTARY LatAmOil

Earlier this week, Foreign Ministry officials national pride.
in Caracas said they had presented Guyanese
authorities with “evidence and location co-or- Economic factors
dinates which show that the vessels were carry- The incentive in question is the presence of large
ing out illegal fishing activities in jurisdictional oil reserves offshore Guyana. Stabroek, the block
waters of the Bolivarian Republic of Venezuela.” that contains the country’s only producing oil-
The dispute has already drawn attention field, lies within the offshore section of the dis-
from third parties. Most of them have been puted territory.
sympathetic to Guyana and not to Venezuela. The block has been a flashpoint before. In
The US State Department, for example, has late 2018, a Venezuelan naval ship approached a
explicitly stated that Washington will support vessel contracted by ExxonMobil (US) for seis-
Georgetown’s position, as have the Canadian mic data collection. The US major responded by
government and a key multi-lateral body, the suspending the survey, but it said subsequently
Organisation of American States (OAS). that it did not expect the border dispute to affect
The government of Trinidad and Tobago has its operations in the Guyana-Suriname basin.
taken a different and more neutral stance, in And so far, it has been correct. ExxonMo-
line with its past attempts to avoid conflict and bil and its partners brought the Liza-1 field on
leave room for oil and gas co-operation with stream at Stabroek in December 2019 and have
Venezuela. On January 27, the Caribbean state’s continued to operate there since then (though
Foreign Minister Amery Browne said that Port they did have to reduce production in the sec-
of Spain had brokered an accord under which ond and third quarters of 2020 because of prob-
it would mediate a virtual meeting between lems related to gas injection and flaring).
Georgetown and Caracas. The question now is whether Venezuela will
Venezuela’s foreign minister has pledged to remain as quiet on this front as it has been so far.
attend these talks, according to Browne. It is not President Nicolas Maduro and other officials in
yet clear, though, whether Guyana’s foreign min- Caracas may be tempted on some level to inter-
ister will accept the invitation. Nor is it known vene, not just to execute a power play but to
when the proposed meeting might take place. gain access to Guyana’s crude reserves. Stabroek
alone contains at least 9bn barrels of oil equiva-
Legal factors lent (boe) in recoverable reserves, and there may
This incident did not occur in isolation. It came be more in other offshore blocks. These volumes
shortly after Georgetown scored a legal victory could prove useful to Venezuela, which has seen Venezuela could
over Caracas. That victory came in the form of its oil output (and thus its oil revenues) decline
a ruling from the International Court of Justice precipitously within the past few years. They use the threat
(ICJ) in The Hague, which declared earlier this might be difficult to sell on the open market, in
month that it had standing to settle a long-run- light of the US sanctions regime, but they could of infringement
ning border dispute between Venezuela and at least be directed to the refineries owned by
Guyana. the national oil company (NOC) PdVSA and on Guyanese
The ruling has drawn praise from Guyana used to alleviate the dire shortages of fuel on the sovereignty as a
and criticism from Venezuela. The latter has domestic market.
been arguing that ICJ was not the proper forum bargaining chip
for resolving the matter and has said it would And back to diplomacy
like UN Secretary-General António Guterres to Doing so would have negative consequences in future talks
take charge. Guterres has not commented pub- for Venezuela in the near term, in that it would
licly on the matter, but his spokesman Stéphane probably invite condemnation of acts that served with the US
Dujarric told the Miami Herald earlier this week to violate Guyana’s sovereignty and to flout the
that the secretary-general had previously offered rulings of the ICJ. Nevertheless, the threat of it
his assistance to Georgetown and Caracas. could serve as a bargaining chip in future talks
But he also indicated that the UN was not with the US government.
likely to challenge the court ruling. Any effort to That is, Caracas might be able to take advan-
assist by Guterres “would not, in any way, under- tage of expectations that a diplomatic furore
mine the judicial process before the ICJ,” he said. would follow any attempt to assert control over
The matter before the ICJ concerns Vene- the Guyanese offshore zone. It might be able to
zuela’s claim to territory that lies within Guy- make a case that if Washington were to relax
ana’s internationally recognised borders – and existing trade restrictions slightly, especially
the section of the seabed that extends from that with respect to humanitarian deliveries of fuel
territory. The dispute has been going on for for civilian use, it would be willing to stop press-
more than a century, with Venezuela asserting ing its claim to territory now under George-
its right to control the land it describes as the town’s control.
Essequibo province and Guyana pointing to past Moreover, it might draw a better response to
agreements signed between the UK, its former this line of argument now that the US presidency
colonial ruler, and Venezuela on the peaceful is held by Joe Biden rather than Donald Trump.
resolution of the matter. The latter was known for his strong opposition
Guyana has an obvious incentive to stand to the socialist government of Venezuelan Presi-
fast, as the Venezuelan claim covers around two dent Nicolas Maduro, while the former has indi-
thirds of its territory. But Venezuela has its own cated that he wants to take a different approach
incentives, and one of them goes beyond mere to Latin America. ™

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