How quickly fortunes can change

Oct 25, 2023 Features / Columnists, Peeping Tom

---

Kaieteur News – There is yet to be any indication that both the government and the Opposition appreciate the nuances of recent developments in Venezuela as these relate to the territorial controversy with Guyana. There are serious geo-political and economic undercurrents which are yet to be acknowledged the government and the opposition.

Opposition Leader, Aubrey Norton is correct in his opinion that Venezuela is seeking to divert attention away from the ICJ process and more towards the need for a diplomatic solution under the Geneva Agreement. He also is correct that the ICJ process was initiated under the Geneva Agreement.

However, the present situation is more complex than that. The actions taken by Venezuela are not simply a reaction to the ICJ process which Venezuela had divorced itself from and then attempted to frustrate with a last-minute intervention.

There are geo-political and economic dimensions to the present developments. Unless our leaders are aware of these dimensions, they will mis-strategize in responding to what they view as an attempted annexation of the Essequibo by Venezuela.

Recently, there has been a thawing of tensions between Venezuela and the United States of America. The United States recently eased its sanctions on Venezuela. The slacking of the sanctions would allow, over the next six months, for Venezuela to export and unlimited amount of petroleum to markets of its choice. In return, Venezuela is required to engage its Opposition parties in dialogue; ensure electoral guarantees, including internationally monitored elections by the end of next year; and to release political prisoners and wrongfully-detained US citizens.

The talks which led to this new deal with the United States was no overnight development. A delegation from the United States had begun negotiations with Venezuela one year ago.  The US was pushed into talks because of the large number of illegal migrants, including Venezuelans, who were seeking to enter the United States. As of the first half of this year, almost half a million Venezuelan migrants entered the United States. These developments only serve to amplify the negligence of the government of Guyana in failing to appoint an Ambassador to Venezuela after more than three years. Had Guyana had an ambassadorial representative in Caracas, Takuba Lodge would have been better apprised of these developments. As Reuters reported yesterday, following the easing of sanctions, major oil traders were rushing to secure deals to buy Venezuelan oil. This could eventually translate over the next year to major oil companies seeking partnerships with the state-owned Venezuelan oil companies, a development that can shift investment away from Guyana’s oil blocks.

Venezuela has the world’s largest reserves of petroleum. But oil companies are not likely to immediately rush to help Venezuela exploit these reserves, because of a six-month conditional lifting of sanctions. But once Maduro sticks to his end of the bargain, the sanctions are likely to be extended. Once free and fair elections follow, these sanctions can be fully lifted by the end of next year. This should trigger major oil companies to consider investing in Venezuela. One of the oil companies already in Venezuela is Chevron. In fact, Chevron in a joint venture with the Venezuelan government is already producing 135,000 barrels of oil per day and this is expected to increase to 150,000 barrels per day by the end of this year. Most of the present production is exported to the United States under a special dispensation granted by the United States. As reported last month, Chevron has begun drilling operations in Venezuela.

It therefore is obvious that there are two main factors influencing the shift in US policy towards Venezuela. The first is the economic interests of US oil companies, and particularly Chevron’s sale of Venezuelan oil to the United States. The second major factor is the migrant factor. The US is keen to reduce the flow of illegal migrants and may be inclined to allow Venezuela some leeway in recovering from its protracted economic crisis. But now the situation becomes more complicated. It is being reported that Chevron has signed an agreement to acquire Hess for US$53B. This is the same Hess that is a partner with ExxonMobil and CNOOC in Guyana’s Stabroek block. With the acquisition of Hess, the situation becomes trickier because Chevron could use its influence to downgrade production in the Stabroek block as part of its plans to expand production in Venezuela. The proposed sale of Hess to Chevron can be detrimental to Guyana. And Maduro can offer inducements to Chevron to try to downgrade its presence in Guyana. But it can get worse for Guyana. Hess has an agreement for the purchase US$750M in carbon credits from Guyana. With the planned acquisition of Hess by Chevron, there is no certainty that Chevron will continue with that deal. This will be a major blow to environmental ambitions of President Irfaan Ali. But worse than that is that if within two years, Venezuela’s oil sector opens up fully to foreign investors this could leave Guyana in the shadows.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

---

• Economic, Government, opposition, Peeping Tom, Venezuela

---