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Matthew Smith

Matthew Smith

Matthew Smith is Oilprice.com's Latin-America correspondent. Matthew is a veteran investor and investment management professional. He obtained a Master of Law degree and is currently located…

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Oil Riches Fuel Heated Dispute Between Venezuela and Guyana

  • Venezuela claims ownership of the resource-rich Essequibo region, which constitutes two-thirds of Guyana's territory.
  • Recent evidence suggests heightened Venezuelan military activity along Guyana's border, raising fears of a potential invasion.
  • Diplomatic efforts, including a pact signed in 2023, have failed to ease tensions as both sides remain locked in a territorial dispute.
South America

Squabbling between Venezuela and South America’s newest oil-producing nation Guyana over the resource-rich Essequibo region is heating up once again. The more than century-long quarrel centers on Venezuela’s claim to the 61,000 square mile area, which comprises roughly two-thirds of Guyana’s sovereign territory. After supermajor Exxon made a swathe of high-quality oil discoveries in the waters off Essequibo, socialist Venezuelan President Nicolas Maduro’s saber-rattling intensified. By the end of 2023, there were fears Venezuela would use its military to annex the contested region, although the presidents of both Venezuela and Guyana ultimately agreed to resolve the dispute peacefully. Since then, evidence of heightened Venezuelan military activity along Guyana’s border has emerged, sparking fears Caracas is preparing to seize the Essequibo by force.

The Essequibo and nearby Demara, another territory in Guyana, were originally Dutch colonies established in the 17th century that were seized by British troops after the French occupation of the Netherlands. Both colonies, after reverting to Dutch rule, were officially ceded to Britain in 1814 and then unified with other colonies in the area to form British Guiana. The area was contested by the Spanish Empire, which claimed Britain had encroached upon the territory of its colony, the Vice Royalty of New Granada, which contained present-day Venezuela, Colombia, Panama and Ecuador. The origins of the modern dispute are found in Venezuela’s emergence as a sovereign nation in 1831 after the country left the Republic of Gran Colombia, formerly the Vice Royalty of New Granada, which achieved independence from Spain in 1819. Caracas chose to exercise Venezuela’s colonial legacy laying claim to the Essequibo after gold was discovered in the area. 

Following substantial U.S. pressure, which arose after Caracas hired a Washington-based lobbyist who argued Britain had breached the Monroe Doctrine, the 1899 Washington Treaty of Arbitration settled the dispute. That international agreement, which essentially found in favor of Britain, established the border that exists today. The rising popularity of leftist politicians in British Guiana, coupled with increasing demands for independence, alarmed rightwing governments in Caracas that were battling a Cuba-backed leftist insurgency. Venezuela’s rightwing governments were fearful of that conflict intensifying, particularly with the conservative central government in neighboring Colombia fighting a multi-party civil war against several leftist guerilla movements, which Bogota appeared incapable of defeating. After the Cuban Revolution, socialism’s popularity and volume of leftist insurgencies soared across Latin America. This sparked alarm in Washington, especially as the Cold War intensified and Soviet influence grew, seeing the White House perceive anti-communist Venezuela as a natural bulwark against the spread of Marxist ideology in Latin America.

Related: 2 Ways to Play Europe’s $800 Billion Energy Crisis

As such, the claim to the Essequibo gained a new significance in Venezuela during the Cold War. Anti-communist President Romulo Betancourt, known as the father of Venezuelan democracy, resurrected the claim to the Essequibo. In 1962, during Betancourt’s second presidency, Caracas declared the Washington Treaty null and void as the rightwing government ratcheted up pressure on British Guiana’s leftist pro-independence leaders. Betancourt used this to derail the colony’s push for independence and prevent a socialist government from taking power, which it feared would turn Guyana into a haven for the leftist guerillas at war with Caracas. It isn’t only Maduro who has considered invading Guyana. Fervently anti-communist rightwing dictator President Marcus Perez Jimenez, a military officer who ousted Betancourt in 1948, prepared to invade British Guiana in 1958, although a coup d'état toppled his regime before the plan was executed. 

While Venezuela’s political ecology has changed significantly since the end of the Cold War, with a socialist authoritarian regime in power since 1999, the claim to the Essequibo is one of the very few issues shared by Maduro and the opposition. After a tense end to 2023, where rumors of an invasion of the Essequibo swirled following Caracas’ announcement that a referendum was found in favor of incorporating the territory into Venezuela, the dispute appeared to calm. It has, nonetheless, flared again over recent weeks. Caracas accused Georgetown of awarding illegal drilling licenses to energy companies, objected to Exxon’s drilling campaign and claimed the supermajor was engaging in corrupt conduct with key opposition figure Maria Corina Machado. The greatest threat, however, comes from the mobilization of Venezuela’s reputedly powerful military, which with 337,000 personnel, is ranked third in South America by manpower.

There is abundant evidence Caracas is boosting troop and equipment numbers along the border with Guyana. Intelligence from a range of sources, notably satellite images examined by The Center for Strategy and International Studies (CSIS), indicates this to be the case. They show extensive land clearing which it is believed is being used to establish supply and transport infrastructure as well as create staging zones for military formations. The photos also show a build-up of Venezuelan forces near the border, with patrol boats, light tanks and armored vehicles moving into the area. Supporting this is Georgetown’s claims that satellite imagery from friendly governments revealed intensifying Venezuelan military activity near its border. These events indicate Caracas will deploy more troops, armored vehicles and aircraft to the contested border region, which not only elevates tensions but also the risk of an armed clash.

Related: Could This Unknown Company Help Solve Europe’s Energy Crisis?

Those actions are a breach of the December 2023 Argyle Declaration signed by Venezuela’s President Maduro and Guyana President Irfaan Ali in Saint Vincent and the Grenadines. In this pact, Venezuela and Guyana agreed, first and foremost, that directly or indirectly, they will not threaten or use force against one another in any circumstances, including in relation to any existing controversies. There was also a commitment to refrain from escalating the existing conflict through words or deeds while pursuing good neighborliness and peaceful coexistence. Finally, both countries consented to resolving the dispute peacefully in accordance with international law and establishing a joint commission to find a resolution.

The latest events demonstrate Maduro is acting duplicitously and contrary to the objectives he publicly agreed to, principally resolving Venezuela’s claim without resorting to violence and in accordance with international law. Indeed, Venezuela’s dictatorial president is using the country’s reputedly powerful military, with the threat of invasion, as a lever to ensure Georgetown’s compliance with its goal of annexing the Essequibo. The use of diplomacy coupled with the threat of military violence to coerce a country into changing its behavior is known as compliance. This is one of the preferred strategies used by dictators around the world to achieve their geopolitical objectives. For over a decade, Maduro has openly demonstrated his diplomatic duplicity and willingness to use violence or the threat of violence to terrorize opponents to achieve ideological goals and secure his regime’s future. 

As Russia’s President Vladimir Putin’s invasion of Ukraine demonstrates, illiberal dictators, like Maduro, do not respect international law nor diplomacy and ultimately will nearly always resort to naked force, particularly if they possess a fait accompli, to resolve disputes. A fait accompli is where a regime believes the application of overwhelming military force will allow it to seize disputed territory without triggering a prolonged war. Since 1945, it has become the most common strategy employed by authoritarian states for seizing contested territory. The most recent example is the Kremlin’s belief it possessed a fait accompli that would allow a successful invasion of Ukraine while avoiding all-out war, although that strategy failed with a costly protracted conflict erupting. A fait accompli, like compellence, is essentially a form of coercive bargaining used to achieve diplomatic and political compliance from an opposing state through the threat or actual use of overpowering force. 

Venezuela’s military, on paper, presents itself as among the most powerful in South America and capable of overwhelming Guyana’s minuscule defense force. Key to Maduro’s thinking regarding the Essequibo is his close alliance with Putin, where Venezuela’s autocratic regime sided with the Kremlin regarding Russia’s invasion of Ukraine. Russia, especially since Washington imposed strict sanctions on Caracas, emerged as one of Venezuela’s main backers providing not only financial assistance but also crucial military aid and supplies. The Kremlin has been arming Venezuela’s military since President Hugo Chavez assumed office and launched his 1999 socialist Bolivarian Revolution. The importance of Russia’s military aid soared as Washington ratcheted up sanctions, aimed at cutting Caracas off from global energy and financial markets, against the dictatorial Maduro regime.

Moscow has equipped Caracas with 4th generation fighter jets, helicopter gunships, anti-aircraft missiles, artillery, main battle tanks, armored personnel carriers, anti-armor weapons and a multitude of small arms. In fact, Rosoboronexport, Russia’s state arms seller, licensed a plant in Venezuela to produce Kalashnikov AK-103 assault rifles, the military’s standard long arm. In a show of solidarity with Maduro, the Kremlin has dispatched powerful military assets to Venezuela. These include nuclear-capable Tupolev strategic bombers, destroyers and the Kirov class battlecruiser Peter the Great, considered the world’s largest nuclear-powered surface vessel. Moscow has also dispatched military advisers, bodyguards and deployed troops, including mercenaries from the controversial Wagner Group, to support the beleaguered Maduro regime. Russian soldiers were reputedly even sent to monitor Venezuela’s border with Colombia, Washington’s closest South American ally.

Despite Venezuela’s military strength on paper, there are questions as to whether the armed forces are operationally capable of launching an invasion and seizing the disputed territory. Essequibo’s harsh terrain and lack of infrastructure make it inhospitable to military operations. For those reasons, it is speculated Venezuela’s land forces must pass through Brazil’s territory to reach the region. At the end of 2023, Brazil began reinforcing its military presence on the border with Venezuela and has been sending further personnel as well as equipment since the start of this year. In February 2024, according to a report from news agency Reuters, Brasilia moved two dozen armored cars to Manaus and bolstered the local garrison to 600 troops. The Boa Vista garrison will reportedly be increased to a regiment, and Brazil’s army is considering further troop and armored vehicle deployments along the border. Brazil’s armed forces, which are ranked as the largest and most powerful in South America, are presumed capable of repelling any incursion by Venezuela’s military.

There are significant doubts regarding Venezuela's armed forces' capability and combat readiness. During 2021, Caracas’ land forces, in a series of clashes in the southern state of Apure, which borders Colombia, were trounced by a handful of battle-hardened leftist guerillas from the dissident 10th Front of the Revolutionary Armed Forces of Colombia (FARC – Spanish initials). The 10th Front, which is estimated to number 300 fighters, repudiated Bogota’s 2016 FARC peace agreement and established an operational base in Apure, where it became heavily involved in illicit economies, including cocaine trafficking and extortion. The dissidents found allies in Venezuela’s military, which saw them cooperating with various units of the armed forces on highly profitable illicit activities,

 including cocaine trafficking. 

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A dispute over control of those economies in Apure combined with Maduro’s rising paranoia over losing control and fears that the dissident 10th Front was growing too strong saw the Venezuelan military launch attacks on the illegal armed band. By March 2021, ground elements of Venezuela’s ground forces, including the army, police special forces and Bolivarian National Guard, were locked in an asymmetric conflict with the 10th Front. Despite their numerical advantage and dominance in firepower through the deployment of fighter jets, artillery, helicopters and armored vehicles, attacks by Venezuelan ground forces foundered against the experienced guerillas’ irregular tactics. The dissident FARC guerillas inflicted heavy casualties on Venezuelan forces including capturing many soldiers in ambushes, with it believed the real death toll is double the 16 dead officially reported

There is considerable conjecture as to why Venezuela’s armed forces failed to defeat a minor adversary, especially when their substantial superiority in numbers and firepower is considered. Deficient training and equipment, poor strategic as well as tactical planning and low morale were responsible for a lack of combat effectiveness. There is also speculation that the capability of Venezuela’s armed forces has been degraded by its growing political role, where it is a tool used to ensure the dictatorial Maduro regime’s survival rather than as a professional apolitical organization tasked with defending Venezuela’s sovereign territory. For these reasons, Caracas’ military buildup on Guyana’s border and Maduro’s saber-rattling appear to be pressuring Georgetown through the threat of violence rather than presenting as a genuine plan to invade Guyana and annex the Essequibo.

By Matthew Smith for Oilprice.com

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  • David Messler on March 04 2024 said:
    Excellent article. Learned a lot reading this piece. Always enjoy your work.

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