Oilprice.com reported an under-the-radar blockbuster story in late July regarding the amazing surge in oil exports from Guyana.
Brief Background
The reader might want to check my post on Essequibo for some background on the fraught history between Venezuela and Guyana. Very briefly, Guyana was formerly known as British Guiana and was a possession of England long before Venezuela ceased to be a Spanish colony in the 19th Century.
After the wars of independence, Venezuela, seeing that British Guiana had significant gold deposits, claimed most of that territory for herself. The British told them to pound sand, at which Venezuela appealed to the United States for resolution. In a nutshell, President Grover Cleveland persuaded both parties to agree to arbitration and, given the voluminous records available, the results of arbitration, to which both parties officially agreed, established the boundaries as they were taught to me during my childhood years in Venezuela, including Venezuela’s claim to the entirety of the Orinoco Delta.
The level of satisfaction by Venezuela to this resolution can be inferred from the fact that when President Cleveland died in 1908, Venezuela lowered her flags to half-mast.
That was then.
In the latter 20th Century Venezuela again demanded the territory and in late 2024 had moved “tanks, missile equipped patrol boats, and armored carriers” to the border while raising the volume of jingoistic pronouncements to alarming levels. As my Essequibo post noted, “Historically, ‘revolutionary’ regimes, which emphatically include Communist and Socialist inspired governments, seek confrontations and conflicts as they point fingers to ‘the other’ as excuses for their own failures…”
Venezuela’s claims have been ingrained in school children for generations now, so much so that when a recent article published a map of the country sans the claimed territory, the comments by Venezuelan readers were astonishingly virulent, I am sorry to say.
The Essequibo controversy has been subsumed by the events of the past twelve months, including the Maduro capture and the wars with Iran. Not to mention the earthquakes this past June.
Stunning Developments
Such events have also overshadowed some truly stunning developments in Guyana herself.
Her oil exports — close to 1 million barrels daily — will soon surpass Venezuela’s. And, as I understand it, these exports are mostly — if not entirely — from off shore rigs which have achieved such respectable numbers in a mere four years, measured from discovery to extraction and production.
Exxon-Mobile has done a phenomenal job working with Guyana and getting this multi-billion dollar project to succeed. This was despite the aforementioned territorial dispute with Venezuela which, if Venezuela had succeeded, would have expropriated territorial waters where Exxon is operating — almost 7 million acres holding an estimated 11 billion barrels of oil and the only operational oil fields in Guyana.
And there is an additional floating production site expected to go online this year. Should that go as planned, Guyana will surpass Venezuela’s output. That site and related storage and extraction investments are estimated to cost about $13 Billion.
Exxon continues to invest in Guyana, with yet another project expected to go online next year and others in 2029 and 2030.
Guyana has provided a measure of stability and political predictability which in turn encourage private enterprises to risk billions of dollars in exploration and extraction, not to mention ongoing maintenance and calibration which extend and expand the productive life of the massive operations.
This was the environment in Venezuela in the first half of the 20th Century. For just two posts descriptive of that era see An Empire Named San Tomé and Ranchitos IV.
At present, after the extraction of Maduro, Venezuela is doing her best to expand production; however, her growth is “constrained by the need to rebuild her heavily corroded petroleum infrastructure. This will require billions of dollars and at least a decade.” That’s billions of dollars, not to expand new production, but to get its massive infrastructure back up to par, to where it was at the turn of this century.
However, Maduro’s extraction was good news for Guyana as it removed that ongoing threat of military action against her.
A stable political and economic environment in a resource rich land will do wonders for its people as well as for the world.
This good news from Guyana will not immediately offset the loss of global supply caused by the wars on Iran — where 20 million barrels of oil shipped daily prior to hostilities. That is down to a fraction today. However, at least for the Americas, Guyana is welcome news, especially when considering that she is in the early stages of development: similar to Venezuela in the early 20th Century.
Guyana, coupled with Brazil and Argentina, may upend the global energy map away from the Gulf Cooperating Council (GCC) to our continent, which as far as we know, is not expected to be as volatile a region as the Middle East thereby allowing its energy economic activities to proceed without “choke points” and other turmoil.
This post is intended to give information about hopeful developments in South America. I have no illusions concerning the very serious disruptions caused by the Iran wars and sincerely hope and pray they come to a conclusion “yesterday”. The hopeful developments in Guyana will not cover or cancel the impact of the drastic reduction of Hormuz traffic anytime soon.
But the news that is bubbling up down there is good and, all things being equal, will eventually give us a greater measure of energy self-sufficiency.
An Exxon Mobile floating production storage and offloading vessel offshore Guyana
Exxon’s ninth discovery; they waste no time in building for it