Would The US Intervene To Defend Guyana's Oil?

By Gregory R. Copley, Editor, GIS/Defense & Foreign Affairs.

Venezuela’s revival of its border dispute with the Cooperative Republic of Guyana may provide an opportunity for the AUKUS pact - Australia, United Kingdom, United States - to reverse or challenge the gains of the People’s Republic of China (PRC), Russia, Iran in South America and the Caribbean.

The territorial dispute over the Essequibo region of Guyana extends back to 1840, ostensibly resolved with the Paris Arbitral Award of 1899, but was revived with the discovery of massive energy reserves off its coast in the early 21“ Century.

This was exacerbated by Venezuela and its allies in 2022-23 for a variety of reasons, and in ways that broke with years of bilateral and multilateral agreements and negotiations between the two states.

The US Southern Command has the new dispute on its radar, and the UK Government and the Commonwealth have been stirred into action. Southern Command, as of early December 2023, had begun conducting joint flight operations with the Guyana Defense Forces, sending a message to Venezuela. And US Secretary of State Antony Blinken told Guyana Pres. Mohamed Irfaan Ali that the US would support “Guyana's sovereignty and our robust security and economic cooperation”.

Venezuelan Pres. Nicolas Maduro criticized Guyana for involving the United States, even knowing this was an inevitable consequence of the Venezuelan military build-up on Guyana's border.

As well, several major US energy corporations have a stake in the outcome, given their participation in one of the largest new petroleum fields in the world.

And yet it is Beijing and Tehran that have worked with the Venezuelan Government to escalate the crisis to the point of conflict in order to pull US forces away from build-ups in the Indo-Pacific which challenge, separately, the PRC's People's Liberation Army (PLA) expansion, and Iran's security as Israel and the US move against Iranian military adventurism.

The PRC has for the past few years worked consistently to keep US and UK forces locked into the Euro-Atlantic, and has benefited from the Russia-Ukraine war, the Hamas-Israel war, and the feints of PRC basing in the Atlantic, along with attempts to push Argentina into threatening war again over the Falkland Islands.

The prospect of US and UK military engagement to support Guyana is real, and while it does indeed promise to keep their forces out of the Pacific —to the benefit of the PRC — it also offers a chance for the UK to demonstrate its commitment to a Commonwealth ally and for the US, in particular, to clear the PRC's influence out of the Caribbean basin, where it has become pervasive. It could also be a test of the AUKUS alliance in that Australia would need to show that it is as committed to the Alliance's interests outside the Indo-Pacific as well as in it and that it recognized that the alliance's conflict with the PRC was, indeed, global.

The sudden re-emergence of the prospect of imminent military conflict, then, between Venezuela and neighboring Guyana is more a reflection of the broader strategies of the People's Republic of China (PRC) and Iran, rather than a reflection of the 1899 Paris Arbitral Award it claims to be. Yes, there is a genuine component of Venezuelan nationalism and competition for territory now that Guyana's on and gas reserves in the disputed region are known to be among the most significant in the world.

The fact that Venezuela faces a Presidential election in 2024 is also significant and requires Pres. Maduro campaigned on nationalist lines and the promise that the new energy coveries would revive the economy. But Venezuelans know that the extensive national energy reserves — largely heavy petroleum rather than the light crude of the new Guyana deposits — have been poorly managed by the Maduro Government and have yielded little to the Venezuelan voters.

Venezuela, even by its Central Bank estimates, has inflation running at more than 280 percent a year in 2023, although that figure understates the real hollowing of the national economy.

In the midst of all this, Guyana Pres. Mohamed Irfaan Ali and Venezuela Pres. Nicolàs Maduro on December 10, 2023, agreed to meet in St. Vincent and the Grenadines on December 14, 2023, to discuss the issue of the disputed territory in the Essequibo region — after considerable pressure from Brazil, the Caribbean Community (CARICOM), and the Community of Latin American and Caribbean States (CELAC). The matter is already before the International Court of Justice (ICJ), and Pres. Irfaan Ali (People's Progressive Party/Civic) said that he would abide by the ICJ ruling and that he would not succumb to threats from Venezuela.

Pres. Irfaan Ali, on December 12, 2023, wrote to Dr. Ralph Gonsalves, the Prime Minister of St. Vincent and the Grenadines, to firmly outline the discussions set to take place in Kingstown, St. Vincent, in which the Guyana President expected that CARICOM would stand by its support for Guyana, and reiterating that the talks would not be about a resolution of the border claims by Venezuela, noting that these had already been arbitrated, and that there was no valid dispute over the offshore territorial waters of Guyana, referencing the Stabroek Block, some 120 miles offshore Guyana (and therefore within its exclusive economic zone/EEZ).

The issues of the actual case, however, are secondary to the global geopolitical reality that both the PRC and Iran have been seeking to remove US and Western military pressures on them. The PRC has been seeking to keep the US, in particular, engaged in the Euro-Atlantic space and unable to deploy forces to the Indo-Pacific, and has thus supported the ongoing conflicts between Russia and Ukraine, Israel and HAMAS, and has attempted to prod Argentina into reviving a military threat to Britain's continued possession of the Falkland Islands in the South Atlantic.

In the Venezuela-Guyana context, the PRC and Iran, along with Russia, are the primary allies of Venezuela, and have been clearly preparing for some time to push the Guyana land claim to the point of conflict, including the postulated Venezuelan military invasion of the Essequibo region of Guyana. Venezuelan troops are already deployed on the border of the 159,500 sq.km (61,600 sq.mi). Essequibo region, which is on the western bank of the Essequibo River, splits Guyana.

It is in the offshore territorial waters and economic zone which relate to the Essequibo region that US oil producer ExxonMobil has discovered 11.4-bn barrels of oil in the area since 2015, making it one of the largest finds of the 21st Century. The oilfields of the offshore Stabroek block produce over 500,000 barrels daily. And ExxonMobil is just one of the petroleum companies exploiting the Guyanese oilfields off Essequibo. Exxon owns 45 percent of Stabroek; Hess, which Chevron is buying, owns another 35 percent; the PRC's CNOOC holds the remaining 20 percent.

The PRC would fare well, possibly better than now, if the Essequibo landgrab (and seagrab) was successful for Venezuela, but the US companies would be at risk. Logically, then, the US Government would be seen to be forced to defend Guyana's position, if only in order to protect US economic interests.

Venezuela itself has more than 300 billion barrels of oil reserves, but this is now dwarfed by its previously insignificant neighbor. Venezuelan State oil company PDVSA theoretically has the expertise to exploit the Stabroek block, but would need investment. Its nationalization of the energy industry has also meant that its energy management has become a political tool, generating funds for the military by not the nation. Venezuela could count on some expertise coming from U.S. oil companies, such as Chevron itself which operates with PDVSA, exporting an average of 124,000 barrels per day from Venezuela.

So the situation becomes complex.

In Venezuela’s 2024 Presidential election, Maduro was slated to compete with Maria Corina Machado, an economic conservative and member of the opposition party in the Venezuelan National Assembly. But Machado has been disqualified from holding public office because of her support for U.S. sanctions against the Maduro Government. The U.S. Government has said that sanctions would not be lifted unless the opposition parties could participate in elections.

While Maduro’s election victory would be seen as hollow if there was no credible opposition candidate, it is questionable whether the PRC, Russia, and Iran would be disheartened if Maduro resisted U.S. sanctions threats. They (and Caracas) anticipate that Venezuela would, in the future, be able to trade within the new trading bloc outside the U.S. dollar zone, and as part of the enlarged BRICS (Brazil, Russia, India, China, South Africa) group.

The growth of the non-dollar trading bloc has been largely a result of national leaders wanting to remain outside the threat of U.S. sanctions, a trend that has largely seen the end of the efficacy of sanctions as a viable weapon in U.S. strategic warfare.