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Editorial/Opinion

 

Daniel Lansberg-Rodríguez:
An oil strike in no man's land

 


Captaincy General of Venezuela in 1810, as part of Spain.

At first glance, it looks like the miracle Venezuelan President Nicolás Maduro has been holding out for has finally happened. Exxon Mobil recently announced a “significant” oil find, and the drilling of its first offshore well, in the Stabroek Block, just a few miles off the Venezuelan coast. While details remain murky, some estimates claim that this new cache of crude could approach 1.5 billion barrels. And that potentially constitutes a significant windfall for Caracas, especially since the national oil company, PDVSA, is struggling to cope with low crude prices and a sagging economy.

There's just one snag: The Stabroek Block isn't technically in Venezuela — at least not according to most non-Venezuelan maps. The disputed territory it's in — Guayana Esequiba — actually constitutes around two thirds of the neighboring country of Guyana, population 800,000. (Guyana is perhaps best known to Americans for the 1978 Jonestown Massacre .) Originally a Dutch colony called Essequibo, Guyana was handed over to Britain as part of the 1814 Anglo-Dutch Treaty with no clear western boundary. True to form, the British defined their own, giving themselves an additional 30,000 square miles of territory. Venezuela was not amused.



Maritime area claim by Venezuela

Today, for many Venezuelans, the long-lost “Venezuela Esequibo” region remains an acutely felt historical grievance. It's known as “the Territory To Be Reclaimed,” a lingering reminder of a time when humiliations were imposed upon weaker states by perfidious great powers, especially since a subsequent international arbitration awarded much of the territory to Britain in 1899 under shady circumstances.

The dispute would seem a natural fit for the late Hugo Chávez's unique brand of anti-imperialist demagoguery — and, for a time, it was. But when the price of oil spiked in the early 2000s, Chávez's ambitions became more global. Rather than risk alienating his smaller Caribbean neighbors, which he was attempting to woo through generous supplies of cheap oil, Chávez shrugged off the matter despite considerable domestic pushback. In 2004, he even publicly stated that Venezuela would not interfere should Guyana decide to grant infrastructure and exploratory concessions to multinational oil companies in the contested region — a departure from Venezuelan policy since Guyanese independence in the 1960s. While Chavez's assurance wasn't legally binding, the Guyanese government has since relied heavily upon such magnanimous statements by the late “eternal Comandante” to justify new development projects in the territory.

All of this places Maduro in a somewhat tricky situation: Should he continue his mentor's conciliatory approach and make good on his promise, or try to capitalize on the stored reservoir of aggrieved emotion to stabilize his floundering government?


Venezuela and Guyana with venezuelan Esequibo territory

After all, generations of Venezuelans have been raised on tales of the historic territorial trespass committed against their homeland by foreign powers; Chávez's policy of Guyanese rapprochement was controversial even for him. With popularity levels hovering at a record low of 28 percent , Maduro can ill afford to be seen as the president who definitively surrendered the territory and the oil windfall — especially not while Venezuelans suffer from acute shortages and triple-digit inflation. While it's highly unlikely that Caracas will ever be in a position to profit from the new find, an escalating dispute could serve as a valuable smokescreen to cover up the country's domestic miseries, and any resultant surge in nationalistic sentiment might even help salvage Maduro's legislative majority in the looming December elections.

Like any postcolonial patchwork, Latin America has its fair share of simmering territorial disputes and historical grievances. Bolivia blames Chile for its lack of access to the sea, Guatemala claims either half or all of Belize (depending on who's in charge), and, best known of all, there's the Argentine dispute with Britain over the Malvinas/Falkland Islands. Throughout the region, such issues are often invoked as nationalistic rallying points, since escalation can boost sagging approval ratings and distract from other problems. Doing so, however, is not without risk. In 1981, Argentine military dictator Leopoldo Galtieri was facing many of the same problems currently assailing Maduro, including hyperinflation and international censure for human rights abuses. By escalating the Malvinas dispute, Galtieri briefly spurred a flood of nationalist enthusiasm that made him wildly popular for a time — but eventually led to a disastrous war with Britain that precipitated his eventual downfall and imprisonment.


Venezuela's maritime treaties with Trinidad & Tobago, Barbados and Suriname
and pending delimitation with guyana and Suriname maritime boundary with Guyana

Venezuela, which hasn't warred with a neighbor since its independence, won't do so over the Esequibo, but escalation can take other forms. When the issue of Exxon oil drilling in Guyana first reemerged earlier this year, Venezuelan Foreign Minister Delcy Rodríguez sent a note to Exxon asking them to discontinue their activities. There was no reply, save for a request from the Guyanese government to kindly desist meddling. Venezuela subsequently upped the ante, publishing an ominous warning to the Guyanese public in a local newspaper “deploring” Guyana's unilateral acts and asserting that Caracas “reserves the right to execute all actions in the diplomatic field and in accordance with international law” to preserve its sovereignty in relation to the “Esequibo Reclamation Zone.” When this, too, failed to produce the desired response, Maduro pushed further, publishing an official decree on May 26 asserting Venezuelan military control over Venezuelan coastal waters as far east as Suriname — thereby landlocking Guyana, on paper at least, for its impertinence.

Stern words but no dice. Guyana called the bluff and pushed forward, decrying Venezuelan attempts at “annexation,” canceling local flights to Caracas, and requesting U.N. intervention to force a definitive judicial solution. Maduro has since backed down a bit, sneaking a new paragraph into his decree on June 8 clarifying that Guyana won't really be landlocked, since “some maritime area” will be allowed them once an eventual negotiated settlement is found.

Too strong an escalation risks making Venezuela look like a bully. In a much-publicized 2013 incident , Guyana claimed that the “ Bolivarian Armada ” had evicted a Texas-based oil exploration ship from disputed waters, resulting in considerable international condemnation. As small Caribbean countries in the vicinity instinctively rally to the defense of one of their own, Maduro risks undoing what remains of the regional goodwill Chávez had built up over the years. Even Cuba, Venezuela's closest ally, opposes harsh measures towards Guyana. Furthermore, while much-maligned Exxon — which Maduro claims is manufacturing the current crisis to undermine Venezuela's socialist revolution — may have the biggest stake in the Stabroek project, a 25 percent minority stake is currently held by a subsidiary of China National Offshore Oil Corporation: And the Maduro regime's survival is heavily dependent on Bejing's goodwill (and regular loans).

Faced with this conundrum, Maduro will likely revert to what he does best: waiting it out and hoping for a miracle. Maduro will likely revert to what he does best: waiting it out and hoping for a miracle. Perhaps Guyana will change its mind and request to be annexed by the glorious Bolivarian revolution. A contrite Exxon might unexpectedly decide to throw the odd billion his way, if only to atone for the sins of its capitalist past. Or Venezuela might have the luck to find the fabled golden city of El Dorado, long rumored to be hidden somewhere in the eastern Venezuelan jungles. Now that would really solve all of Maduro's problems — provided, of course, it isn't on the Guyanese side.

 

 

Daniel Lansberg-Rodríguez teaches on Latin America at Northwestern's Kellogg School of Management and is a weekly columnist for the Venezuelan daily newspaper El Nacional. His Twitter handle is @Dlansberg. Petroleumworld does not necessarily share these views.

Editor's Note: This commentary was published by Foreign Policy, on June 16, 2015. Petroleumworld reprint this article in the interest of our readers

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