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Venezuela strongman leader Nicolás Maduro is set to hold a referendum on Sunday December 03, among Venezuelans on taking over a vast swath of the territory of neighbouring oil rich Guyana.
Caracas has for more than 200 years claimed rights over Essequibo, the 160,000 sq km of land in Guyana.
The heightened interest in the expanse of Amazon jungle springs in part from its resource riches, including offshore oil deposits that have since 2019 made Guyana the world’s fastest-growing economy.
Guyana, a former British colony of less than one million people, is now a major South American oil producer and global petroleum exporter.
Analysts say the potential for Venezuela, an ally of Russia, to follow the referendum with an incursion into western-leaning Guyana has raised concerns in the region.
Despite pending litigation at the International Court of Justice (ICJ) over where the two countries’ border should lie, Venezuela has decided to ask its citizens’ opinion on whether or not it should create a new “state” in Essequibo — a move Guyana claims would pave the way for its neighbor to “unilaterally and illegally” seize the region.
At 160,000 square-kilometers (62,000 square-miles), Essequibo makes up more than two-thirds of Guyana, which has administered the area for over 100 years.
The Guyanese government insists on retaining the border determined in 1899 by an arbitration panel, while claiming Venezuela had agreed with the ruling until it changed its mind in 1962.
Caracas, for its part, claims the Essequibo River to the region’s east forms a natural border and had been recognized as such from 1777 when the so-called Captaincy General of Venezuela, an administrative district of colonial Spain, was established.
The referendum
The plebiscite — described as consultative and non-binding — will pose five questions to Venezuelan voters.
They include whether or not to reject the 1899 decision, which Caracas says was “fraudulently imposed.”
Also on the ballot is whether Caracas should reject ICJ jurisdiction over the dispute, and whether or not to grant Venezuelan citizenship to the people — currently Guyanese — of a new “Guyana Esequiba State.”
Georgetown however fears that Venezuela will use a majority “yes” vote as a defense to abandon the ICJ proceedings and resort to unilateral measures, including annexing the entire region by force.
Guyana had filed a urgent application to the ICJ last month to stop the referendum.
On Friday, judges at the World Court on Friday ordered Venezuela to refrain from taking any action that would alter the situation on the ground.
Oil rich Guyana
Some say the real issue is oil, with the dispute intensifying since ExxonMobil’s 2015 discovery of crude in Essequibo.
Tiny Guyana has the world’s biggest reserves of crude per capita, while economically ailing Venezuela, facing crippling international sanctions, sits on the largest proven reserves overall.
Just last month, Guyana announced a “significant” new oil discovery in Essequibo, adding to estimated reserves of at least 10 billion barrels — more than Kuwait or the United Arab Emirates.
Data from Guyana’s Ministry of Natural Resources shows the country was lifting 351,600 barrels of oil per day at the end of July 2023.
As a result, Guyana is benefiting from a tremendous economic windfall, with the country emerging as the world’s fastest-growing economy with 2022 gross domestic product (GDP) expanding by a stunning 62%.
Industry consultancies and the government in Georgetown expect Guyana to be pumping 1.2 million barrels of crude oil per day by 2027, a figure greater than many OPEC members.
The Guyana oil boom is being developed by the Exxon-led consortium which holds a 45% stake, Hess, with a 30% interest, and CNOOC, holding a 25% stake.
Exxon prioritized development of Guyana assets in late-2020 due to the Liza oilfield’s low breakeven price of $25 per barrel to $35 per barrel and high-quality light sweet crude oil.
That saw the global energy supermajor ramp up activity with a large exploration drilling campaign that eventually yielded over 30 discoveries and more than 11 billion barrels of oil resources.
Caracas called the referendum after Georgetown started auctioning off oil blocks in Essequibo in August.
Industry low breakeven prices, estimated by Rystad to average $28 per barrel, make operating in offshore Guyana highly profitable.
Could this trigger a war between Venezuela and Guyana?
The rhetoric has escalated in recent weeks, with the tone darkening. Could the dispute turn to war?
“On Sunday December 3, we will respond to the provocations of Exxon, the US Southern Command, and the president of Guyana with a people’s vote,” Maduro said during a broadcast of his weekly television programme on November 20.
Venezuela has increased its military presence near the border and Guyana has raised the possibility of allowing foreign military bases to be set up in the area.
The Guyanese side has vowed that “Not a blade of grass” will be yielded to Venezuela.
Guyana has warned of a “naked threat of territorial aggression” and Guyanese President Irfaan Ali has repeatedly called for “common sense” to prevail.
“This is a textbook example of annexation,” Paul Reichler, a US lawyer representing Guyana before the ICJ, said in The Hague last month, claiming that Venezuela was preparing a military build-up in the Essequibo region in case it wished to enforce the outcome of the referendum.
On Thursday, Brazil expressed “concern” about the tensions, and said it was in contact with both parties in search of a “peaceful solution.”
A specialised US army delegation visited Guyana recently, and discussed “processes to enhance both countries’ military readiness and capabilities to respond to security threats,” said the US embassy in Georgetown.
Bharrat Jagdeo, Guyana’s vice-president, said last week that “all the options available for us to defend our country will be pursued. Every option.”
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