Guyana asserts oil production momentum amidst Venezuelan threats

(Bloomberg) — Oil majors operating in Guyana’s waters are “moving ahead aggressively” with production plans despite Venezuela’s threats to take over the region in an escalating border conflict, according to President Irfaan Ali.

Speaking from Georgetown, Ali said Guyana’s troops are prepared to defend the nation’s territory after Venezuela’s Nicolas Maduro revived a long-dormant dispute over the Essequibo, a swath roughly the size of Florida where major oil discoveries have been made in recent years. Companies operating there were not intimidated by orders from the Venezuelan leader to leave the region, he added.

“There’s absolutely no slowing down” in production plans, Ali said in a video interview on Monday. “We are on the right side of international law, on the right side of ethics, and on the right side of history.”

Maduro last week told ExxonMobil Corp. and others to withdraw from the area within three months, leaving Brazil and other Latin American nations on high alert about the possibility of an armed conflict in the region. Exxon leads a joint venture that includes Hess Corp. on Guyana’s Stabroek Block, home to the world’s largest crude discovery of the past decade.

Ali and Maduro are set to meet on Thursday on the island nation of St. Vincent and the Grenadines in a bid to deescalate tension. The dispute intensified in recent years as the massive oil discoveries off the coast of Guyana led the small English-speaking nation to become the world’s fastest-growing economy. 

Estimates that Guyana’s economy will grow 25%-30% a year in the medium-term are “very conservative,” said Ali, who is targeting more than 1.2 million barrels of daily production in the coming years.

“We are continuing to ensure that we are in a position with our international partners to defend what is ours,” Ali said. “But make no mistake, our troops are going to ensure the territorial integrity and sovereignty of Guyana is respected.”

Venezuelan politics

The escalating dispute over the Essequibo is largely seen as an attempt by Maduro to rally the population with nationalistic rhetoric ahead of next year’s presidential elections. The Venezuelan leader is widely expected to run for a third term, despite his low poll ratings and the rise of opponent María Corina Machado’s popularity. 

Machado is currently banned from holding office, though Venezuela has outlined a legal path to restore her eligibility, under pressure from the US. In exchange for reaching an agreement with some opposition leaders, the US Treasury eased oil sanctions on Caracas last month, allowing foreign companies including Chevron Corp. to expand operations in the country and increase exports, providing Venezuela with much-needed revenue. 

Guyana has insisted that the Essequibo is within its borders. The matter is currently being considered by the International Court of Justice, though Maduro has said he doesn’t recognize its jurisdiction.

In a press briefing on Monday, Venezuela’s Foreign Affairs Minister Yvan Gil told reporters that Guyana’s oil licenses in the region were “illegal” and Maduro’s government was willing to find formulas for “shared development.”

Lula’s Mediation

The belligerence toward Guyana has put a strain on Maduro’s recently restored relationship with Brazil, by forcing longtime ally President Luiz Inacio Lula da Silva to mediate the conflict between his northern neighbors. In a phone call Saturday, Lula told Maduro to avoid unilateral measures that could deepen the crisis, according to a statement from Lula’s press office. -=

While Lula had been invited at the request of the two countries, top foreign affairs adviser Celso Amorim will go in his place, according to a government official familiar with the negotiations. The meeting is being organized by the Community of Latin American and Caribbean States, or CELAC, and the Caribbean Community

Lula’s support has been “unwavering,” said Ali. A good relationship with its northern neighbor is benefiting Brazil as the countries build a deep water port off the Guyanese coast that will allow output from northern Brazil to cut as many as eight days in transportation time to the Atlantic, he said.

“We want the region to know that we will do everything within our power to ensure the region remains peaceful and stable,” Ali said. “We have a responsibility to ensure that we explore every avenue to have Venezuela deescalate this level of aggression and threat, and then for us to move toward a peaceful coexistence.”