Venezuela raises stakes in dispute with Guyana over oil riches

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Venezuela’s President Nicolás Maduro has dramatically raised the stakes in his country’s border dispute with Guyana, ordering state companies to exploit contested oil and mineral deposits and redrawing official maps after claiming an “overwhelming” mandate in a referendum last Sunday.

Maduro’s bellicose speeches have alarmed Guyana and sparked fears that Venezuela might use force to seize the remote Essequibo area, which accounts for two-thirds of its neighbour’s territory, as well as a big offshore oilfield operated by US oil major ExxonMobil.

Guyana’s President Irfaan Ali late on Tuesday said his country’s defence force was “on high alert” and promised to refer the matter to the UN Security Council. “Venezuela has clearly declared itself an outlaw nation,” he added.

A conflict between two oil-rich nations in the Americas would be a nightmare for the Joe Biden administration, which has eased economic sanctions on Venezuela in the hopes that Maduro could be persuaded to hold free and fair elections next year and help improve global oil supplies.

But most experts believe military conflict is unlikely in the near term. They say the revolutionary socialist Maduro’s main motive for running a patriotic referendum campaign was to take voters’ minds off his own unpopularity and the evident support for the main opposition candidate in next year’s presidential election, María Corina Machado.

“My sense is that it’s probably a bluff,” said Evan Ellis, professor of Latin American studies at the US Army War College. “It’s probably an initiative by Maduro to distract attention from the presidential election and US pressure for democratic reform.”

Venezuela’s President Nicolás Maduro at a rally
Venezuela’s President Nicolás Maduro, centre, ‘is an expert at sleight of hand, at big gestures which mean nothing’, said one observer © Pedro Rances Mattey/AFP/Getty Images

Officials in Caracas claimed majorities of more than 95 per cent in favour of five referendum questions on Essequibo, including the creation of a new Venezuelan state encompassing the remote territory.

But independent observers questioned the official turnout figure of 10.5mn — which if true would exceed the number who voted for Maduro’s popular predecessor Hugo Chávez in the presidential election of 2012 — noting that many polling stations were sparsely attended.

Venezuela has long disputed an international arbitration tribunal’s decision in 1899 to award Essequibo, an area the size of Greece, to what was then colonial British Guiana. It was Exxon’s discovery in 2015 and subsequent exploitation of one of the world’s biggest recent oil finds off the Essequibo coast that reignited Caracas’s interest.

Exxon is now building up production from the Stabroek offshore block, something Venezuela’s government has used to portray Guyana as a US puppet.

Map showing Stabroek oil concession off the coast of Guyana, with territorial waters of Guyan and Venezuela

The US state department gave a muted response to Sunday’s vote, urging Venezuela and Guyana “to continue to seek a peaceful resolution of their dispute”. “This is not something that will be settled by a referendum,” it added.

Brazil, which borders Venezuela and Guyana, has sent additional troops to the border area and President Luiz Inácio Lula da Silva said he hoped “common sense would prevail on both sides” of the dispute.

Venezuela announced this year the construction of a military airstrip, a school and a training ground near the border with Essequibo. A top government official posted a video on social media after the vote showing a group of indigenous people lowering a Guyanese flag and raising a Venezuelan one in its place, purportedly in Essequibo.

Some Guyanese people fear their nation of 800,000 people would be unable to resist an invasion by its far larger neighbour. “People are [very] scared, they are very worried,” said Mike Singh, a telecoms investor who runs a Georgetown-based consultancy.

“Guyana has nothing to defend itself with except bluster like what we hear from vice-president [Bharrat] Jagdeo and people know it is just balderdash. He’s in no position to do anything.”

Nonetheless, Nicholas Watson, Latin America managing director at consultancy Teneo, believes the Venezuelan regime’s hawkish turn on Essequibo “reflects domestic considerations more than it signals the imminence or likelihood of military action”.

“We don’t know what it really means or what they’ll actually do,” he said. “Maduro is an expert at sleight of hand, at big gestures which mean nothing.”

Any military conflict would heavily favour Venezuela, whose Russian-equipped armed forces far outnumber and outgun Guyana’s tiny defence force. “Venezuela has Sukhoi fighters, MiG attack helicopters, decent naval assets including equipment from Iran, and Russian tanks,” Ellis said.

But Maduro’s armed forces were in a poor condition to occupy the difficult jungle terrain of the Essequibo, Ellis added. Sending Venezuela’s armed forces to fight would be fraught with risk for Maduro, who has relied heavily upon military support to keep power, rewarding senior officers with what US officials say have been highly lucrative franchises in drug smuggling and illicit gold mining.

Phil Gunson, Andes senior analyst at International Crisis Group in Caracas, said: “Maduro is only in power thanks to the military high command and if they think he’s losing it, then it could be very serious for him.”

Gunson added: “Maduro is claiming a massive mandate to recover the Essequibo and there’s no clear path to doing that.”

As tensions rise, some see parallels with the early 1980s, when an unpopular Argentine military government launched an invasion to resolve a longstanding territorial claim. The unsuccessful war over the Falkland Islands, or Malvinas as Latin America calls them, ended up being the junta’s undoing. Gunson believes Venezuela is unlikely to go to war now over Essequibo.

“The more likely scenario is that at some point Maduro finds it expedient to whip up the tension on the border and perhaps provoke some skirmishes with the Guyanese military,” he said. “I don’t think that will lead to a full-scale war but the problem is that once you start actually having armed conflict . . . it’s very easy for that to escalate.”



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