The territorial dispute over the Essequibo has been ongoing for over a century, dating back to Guyana’s colonial period. In 1899, an arbitration tribunal awarded the Essequibo to Great Britain, which ruled Guyana at the time. Venezuela rejected the decision, and the dispute has continued to this day, with occasional flare-ups in tensions between Caracas and Georgetown over the subject. In its legal proceedings with the ICJ, Guyana’s argument insists that the 1899 arbitration served as the effective conclusion of the dispute, thereby affirming Guyana’s current sovereignty over the entire territory.
The discovery of oil in the Stabroek Block in 2015 has added a new dimension to the territorial dispute. The Stabroek Block, located offshore in Guyana’s Exclusive Economic Zone, is estimated to contain over 9 billion barrels of oil. Venezuela has laid claim to the waters off the Essequibo coast and has objected to Guyana’s oil exploration activities in the areas. Venezuela has accused Guyana of allowing oil companies to explore in the disputed waters, leading to increased tensions between the two countries. The oil discoveries have elevated Guyana’s geopolitical relevance and economic growth prospects, as the country has emerged as a major player in the energy sector. The production volume brought to market in recent years by non-OPEC producers like Guyana has been cited as a key input to OPEC’s decision-making, including its most recent production cut.
In contrast, Venezuela’s economy has been facing chronic challenges over the last few years. Despite containing the largest amount of oil reserves in the world, Venezuela has suffered from the collapse of oil prices, which has resulted in endemic hyperinflation, scarcity of basic goods, and social unrest. Venezuela’s economic troubles have been compounded by political instability, including a power struggle between the government of President Nicolas Maduro and opposition leader Juan Guaido.
Maduro, now entering his 10th year in power, has managed to weather challenges to his rule thus far amid sanctions and instability. Guaido, previously seen as Maduro’s most formidable political opponent, has lost much of his initial momentum and his parallel government was dissolved last year. With presidential primaries scheduled for later this year, Maduro’s political opponents appear scattered as they work to identify a single challenger to rally around to challenge Maduro in next year’s presidential election. Though Venezuela remains sanctioned by the US, concerns over the stability of global energy prices persuaded the Biden administration to allow Chevron, a US-based oil giant, to resume operations in Venezuela, albeit in a limited capacity, and with the condition that the Maduro government maintain dialogue with the opposition. Last month’s rise in Venezuelan oil exports has been attributed to increased imports by Chevron and Hangzhou Energy, a Chinese state-owned enterprise. However, attracting the necessary capital to boost current oil production levels would require further sanctions relief, making any kinetic action over the Essequibo in the near-term unlikely until after Maduro secures re-election next year.
The Essequibo issue could escalate due to competing interests by the US, China, India, and Russia. China has become a major investor in Guyana’s oil sector, and its state-owned oil giant CNOOOC is a partner with US oil major Exxon Mobil in the Stabroek Block. China is also the largest purchaser of Venezuelan oil, making it a viable arbitrator in any prospective bilateral talks between Guyana and Venezuela.
Guyana’s large Indian diaspora is accentuated by a close security partnership with the Indian government. Guyana’s oil wealth and military needs make it a lucrative growth market for India’s defense exports. The Modi government has set a target of $5 billion USD in defense exports by 2025, more than triple its current export value. In addition to its conflict with Venezuela, transnational organized crime represents an additional security threat. Guyana’s extensive coastline, porous borders, and remote hinterland areas make it an appealing and vulnerable target for criminal networks that use the country as a transit hub and operational site for smuggling drugs, arms, and proceeds from illegal mining.
Russia’s interests in Venezuela include military aid and access to Venezuela’s oil reserves, where Russian state-owned oil giant Rosneft plans to expand crude production. Rosneft has served as a critical lifeline for the Venezuelan government, having provided Venezuela with billions in loans and credit lines. Russia is also a major supplier of military hardware to Venezuela, including fighter jets, helicopters, and tanks. This has helped to bolster Venezuela’s military capabilities, where it currently enjoys a significant advantage over the Guyana Defense Force (GDF) in personnel and equipment.
Thus far, the Essequibo dispute has avoided bloodshed, but previous incidents include intimidation and detainment of shipping, drilling, and fishing vessels operating in Guyana’s territorial waters by Venezuelan patrol vessels. In past speeches, President Maduro has repeatedly made threats to annex Essequibo using military force, but growing US & Chinese interests in Guyana’s oil sector will serve as a powerful deterrent. Furthermore, the Guyanese government has undertaken a modernization drive of the GDF, where it is expected to allocate defense spending toward upgrades of its naval and air fleets to counter the naval threat from Venezuela and safeguard its energy interests.
In conclusion, the territorial dispute between Guyana and Venezuela is unlikely to change following the ICJ’s latest ruling over jurisdiction. Both countries will have to wait years for a final decision over the border dispute. Venezuela’s reluctance to engage in the ICJ’s procedures and its current focus on domestic oil production makes any near-term invasion attempt of the Essequibo a costly and impractical move by the Maduro government.
