ExxonMobil's drilling plans offshore Guyana have angered Venezuela and risk escalating the dispute between the two South American neighbors over Venezuela's claim on a large part of Guyana's oil-rich Essequibo region.
The U.S. supermajor said this week it expects to drill two exploration wells north and west of its Stabroek block offshore Guyana, where three already operational Exxon projects are currently producing more than 550,000 barrels per day (bpd) of crude oil and are expected to reach more than 600,000 bpd in output later this year.
Exxon's pursuit of exploration drilling in the contested region drew harsh reactions from Venezuela, which vowed a "forceful response that adheres to the law."
The simmering dispute between Guyana and Venezuela escalated at the end of last year, when Nicolas Maduro held a non-binding referendum on whether Venezuela should annex the Essequibo region, off whose coasts Guyana's huge oil discoveries have been made in recent years.
Essequibo used to be part of Venezuela during its colonial period, but at the end of the 19th century, an international arbitration gave the land to Guyana, then a British colony. Venezuela has never accepted the arbitration decision, but for most of the time since it was made, it has not acted on its grievance. Related: U.S. Oil Drilling Activity Stalls
Analysts see meager chances that the Venezuela-Guyana dispute would escalate further and saw Maduro's referendum and threats to annex a large part of Guyana's territory as a move to rally a nationalist vote amid waning popularity ahead of the presidential election this year.
In December, Venezuela and Guyana agreed not to use force or escalate tension in the dispute. At a meeting in Brazil last month, Maduro and Guyana's President Irfaan Ali reiterated their pledges not to resort to force.
Brazil, however, reinforced its troops close to its border with Venezuela earlier this month.
While tensions continued to simmer, the president of ExxonMobil Guyana, Alistair Routledge, said this week that the U.S. supermajor is committed to its operations in Guyana despite the dispute with Venezuela.
"We are not going anywhere," Routledge told reporters, adding that Exxon considers its exploration and production contracts with Guyana valid under local and international laws.
Guyana's foreign secretary Robert Persaud told The Associated Press on Wednesday that Exxon had every right to drill for oil and gas in the Essequibo region "because it is within established Guyana waters in a fully demarcated area."
But the announcement of more oil drilling in the area claimed by Venezuela risks escalating the tensions in the region, analysts say.
"The truth is that this announcement couldn't come at a worse time," Geoff Ramsey, a senior fellow at the Atlantic Council, told the Guardian.
"This is going to be a massive test for regional diplomacy."
The U.S. pledged earlier this week urgent military assistance to Guyana to help it defend from threats.
ExxonMobil Guyana's Routledge welcomed the enhanced cooperation between Guyana and the U.S. and said that "We remain committed to Guyana and pursuing business here and delivering on commitments that we made."
Venezuela was not pleased, not at all.
Vice President Delcy RodrÃguez slammed Exxon's drilling plans offshore Guyana in a post on X, saying that the U.S. supermajor "looks to protect its illicit operations, in a sea yet to be demarcated, under the warmongering cloak of the US in complicity with Guyana."
Defense Minister Vladimir Padrino López said "If ExxonMobil has a private security company represented by the Southern Command, and a unit of the Government of Guyana in the maritime area, which rightfully belongs to Venezuela, they will receive a proportional, forceful and legal response."
ExxonMobil is not only pursuing more oil exploration drilling offshore Guyana, it is also keen to tap the country's natural gas reserves. Guyana's government and the U.S. supermajor are looking to nail down a timeline to develop some of the gas resources in the eastern part of the Exxon-operated Stabroek Block.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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