Guyana, Venezuela Agree to Solve Essequibo Dispute Peacefully

Leaders from Guyana and Venezuela have come to a pivotal agreement aimed at deescalating tensions in their longstanding dispute over the oil-rich Essequibo region, Reuters reports.

The accord, established after a meeting between the heads of state in Saint Vincent and the Grenadines, emphasizes a commitment to refrain from using force and to prevent any further escalation.

The Essequibo area, spanning 160,000 square kilometers, has historically been recognized as part of Guyana.

However, Venezuela has recently revived its claim to the territory and offshore areas, especially after significant oil and gas discoveries.

In a joint statement, the two nations declared they "will not threaten or use force against one another in any circumstances" and will avoid escalating conflicts or disagreements.

Essequibo Dispute Background

The Essequibo region has been a longstanding point of contention between Guyana and Venezuela.

Venezuela renewed its claim to the land in 2015 following the discovery of oil off Essequibo's coast.

Despite Guyana's existing agreements with major investors like ExxonMobil and Chevron, Venezuela expressed intentions to permit oil exploration in the disputed territory.

Guyana's President, Irfaan Ali, stressed the importance of resolving the issue through the International Court of Justice (ICJ).

He asserted that while Guyana seeks no aggression or war, it reserves the right to work with partners to defend its country, per BBC.

Guyana's flourishing economy, driven by offshore oil reserves, is expected to triple its output to over 1.2 million barrels per day by 2027.

In contrast, Venezuela, possessing the world's largest proven oil reserves, faces an economic crisis compounded by US sanctions on its oil sales since 2018.

Venezuela claims a land theft conspiracy in 1899 involving the US and European nations that deprived them of the disputed territory.

Guyana disputes this, maintaining the legality of the initial accord and seeking a ruling from the ICJ, a decision that remains years away.

Venezuela and Guyana Oil Industry

The discovery of major oil deposits off Essequibo's shore in 2015 marked a turning point, drawing attention from Venezuela.

An ExxonMobil-led consortium initiated oil pumping in December 2019, transforming Guyana into the world's fourth-largest offshore oil producer.

This operation contributes approximately $1 billion annually to the country, which has a population of nearly 800,000. Guyana's economy witnessed a remarkable 60% expansion in the first half of the current year.

Presently, daily oil production stands at about 380,000 barrels, and this figure is anticipated to reach 800,000 barrels in the coming years, VOA News reports.

Notably, Guyana's crude exports were predominantly directed towards the Netherlands and Panama last month.

A significant portion of the oil sent to Panama was then re-exported to the US West Coast, as reported by S&P Global.

In a bid to harness its offshore oil potential further, Guyana recently invited bids for 14 additional oil blocks dedicated to exploration and development.

Six companies and groups submitted bids, including ExxonMobil, collaborating with U.S.-owned Hess Corp. and China National Offshore Oil Corp.

Additionally, French-owned Total Energies partnered with companies in Qatar and Malaysia.

While Guyana's oil industry thrives, Venezuela's oil sector faces a decline due to mismanagement and economic sanctions following contested elections in 2018.

To further assert its claim, Venezuela's National Assembly is considering legislation that could restrict companies operating in both Venezuela and Guyana.

This article is owned by Latin Post.

Written by: Bert Hoover

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