Why oil and politics are re-igniting an old conflict between Venezuela and Guyana

The world faces a renewed geopolitical fault line in South America, where borders drawn by colonial powers cross disputed territory now rich in resources

A Bolivarian militia member at a polling station during the referendum on Venezuelan sovereignty over the Esquibo region, in Caracas on December 3.
A Bolivarian militia member at a polling station during the referendum on Venezuelan sovereignty over the Esquibo region, in Caracas on December 3.

Why oil and politics are re-igniting an old conflict between Venezuela and Guyana

An old territorial flashpoint between Venezuela and neighbouring Guyana has returned to the forefront of politics in South America, raising concern in the region and the wider world that it could develop into an open war.

The dispute over the Essequibo territory, officially part of Guyana, was thought to have been all-but resolved in 2004, when Venezuela’s President Hugo Chavez distanced himself from his country’s claims over the area, saying they should be consigned to history.

Chavez’s successor, President Maduro, has taken a different approach as his economy has toppled into crisis, sparking a wave of emigration, bitter internal politics and a more aggressive stance over his borders.

Al Majalla looks at the roots of this potential conflict between two nations, in a part of the globe shaped by its colonial history as much as its Amazonian geography and abundant natural resources.

Colonial legacy

Guyana is a small republic in the northernmost part of South America, sharing borders with Brazil, Venezuela, and Suriname, It is a part of the wider Guianas region in the Amazon basin, named from an Indian meaning "land of many waters" because it is rich in rivers.

European colonisers split it up. Spain gave the region Venezuela, while the Portuguese brought in Roraima, which is now part of Brazil. The Dutch carved out Suriname, which has been independent since the mid 1970s. French Guiana remains an overseas dependency, as its name implies.

Then there is Guyana, Britain’s former colony, independent since the mid 1960s. It is the third-smallest country in South America by land area, covering around 214,000 square kilometres. It is the second smallest in terms of population, with around 800,000 people. The Essequibo region constitutes more than two-thirds of its territory and is home to under a sixth of its population.

Guyana is also the sole South American country that speaks English leaving it culturally affiliated with English-speaking Caribbean including Jamaica.

Various indigenous tribes were the original inhabitants of Guyana. It was first colonised by the Dutch in the early 17th century, who relinquished control to the British by the close of the 18th century.

Sugar and slavery

Guyana’s economy was built on sugar plantations, with the crop dependent on slaves brought in from Africa.

After slavery was abolished in 1834, Britain brought in a new workforce, primarily from its Indian colonies, a practice that persisted until the early 19th century and had a major bearing on the country’s population.

The biggest demographic group in the modern Guyana is of Indian descent, at 43% of the population. Afro- Guyanese people make up about a third of it. Traditionally, Guyanese of Indian descent predominantly inhabit rural areas, while those of African origin tend to concentrate in coastal regions.

Guyana’s path to independence in the 1960s, took longer than some of its neighbours, a factor that has influenced the current territorial dispute.

Venezuela’s independence came in 1824. Shortly afterwards, its “liberator” Simón Bolívar staked a claim with the British over the lands to the west of the Essequibo River. In 1899, an international arbitration panel comprised of judges from Russia, England, and the United States ruled in favour of Britain, a decision that Venezuela acquiesced to at the time.

But over subsequent years and with the testimonies of jurists involved, it became evident that the arbitration process was unfair and badly run.

On the eve of Guyana's independence in 1966, a diplomatic accord was reached in Geneva between Britain and Venezuela. It nullified the 1899 arbitration and set up a mechanism to address the dispute via transitional negotiations spanning four years.

But no resolution was reached between the newly established state and its longer-standing neighbour. Venezuela continues to assert its claim over the lands, as does Guyana.

And then came a new factor into this old dispute: Oil.

Oil and money

In 2015, ExxonMobil identified substantial oil reserves in the area claimed by both countries.

Last month, fresh findings put the size of the Guyana find at about 11bn barrels of crude. That is enough to catapult the country above Kuwait into the top spot in rankings of proven reserves per capita.

ExxonMobil is involved in 63 exploration projects and has boosted Guyana's daily oil production to 600 thousand barrels, with the potential to reach 1.2m by the end of 2027.

This comes just as Venezuela’s oil industry is tied up in US sanctions, limiting its ability to export from its own proven oil reserves, which are the biggest in the world. It also has trouble with mismanagement in the industry. Its oil production has plummeted from 3mn barrels per day to less than 400,000 over the last decade, although there is a gradual recovery underway, taking the figure to around 750,000.

A tale of two economies

And so, the two countries have been through very different recent experiences with their economies and the energy export industries that can transform their fortunes.

Since the discovery of oil, Guyana once one of the world’s poorest countries, has been achieving unparalleled global growth figures, also helped by a transformative economic restructuring in the late 1980s. In the current year alone, its national output rose by approximately 38%

Conversely, the Venezuelan economy, already heavily dependent on oil, is grappling with its most profound crisis in history. Over the past decade, its national output has dwindled by roughly 80%, and in 2019, hyperinflation soared to an unprecedented 200,000%, setting a global record that will probably never be surpassed.

People are leaving the country amid this dire economic crisis. Over 7mn Venezuelan citizens have emigrated. A modest recovery is underway, helped by the people turning to the dollar as their primary currency.

People are leaving the country amid this dire economic crisis. Over 7mn Venezuelan citizens have emigrated. A modest recovery is underway, helped by the people turning to the dollar as their primary currency.

Meanwhile, in territory Venezuela has long claimed as its own, Guyana has found oil, making it a potential competitor for the markets its neighbour is able to reach. And as the internal political conditions in Venezuela deteriorate, it has become increasingly assertive on the border, with documented security incidents rising since 2013.


In response to these developments, Guyana escalated the matter by bringing the territorial dispute before the International Court of Justice (ICJ) in 2018.

In April 2023, the Court agreed to make a ruling on the case, saying it was qualified to do so.

Venezuela's President Maduro held a referendum asking voters if they accepted the ICJ's jurisdiction over the matter, alongside other questions on the dispute over the Essequibo region, including one on granting its people citizenship.

An aerial view of the Esquibo region in Guyana taken on December 10

Guyana objected to the poll, even seeking a ruling on its legality from the ICJ, which just urged the country not to take action on the ground that could worsen the dispute.

Maduro claimed the backing of 95% of those polled in rejecting the ICJ's jurisdiction. After the referendum, Maduro drew up a nine-point action plan, including preventing oil exploration in the disputed lands.

Maduro claimed the backing of 95% of those polled in rejecting the ICJ's jurisdiction.

Companies working there were given a three-month ultimatum to halt operations under the threat of a boycott. At the same time, Maduro requested Venezuelan companies to grant exploration licenses.

He declared that a new state should be established covering the Essequibo region and issued revised maps showing it as part of Venezuela. He set up a census for the area and approved healthcare and education coverage for inhabitants, as well as outlining various developmental and environmental projects.

Additionally, Maduro sent a new military unit to the border area.

Guyana described all this as an "existential threat". It mobilised its army and prepared joint military exercises with the United States, saying it may set up military bases in the Essequibo region.

The rhetoric between the two countries has been stark, with both accusing the other of "reckless provocations." This has stoked worries of open conflict, with one side backed by the US and the other in line with the geopolitical ambitions of Russia, China and the global South to remake the world order.

While such global currents are relevant, in South America, rhetoric tends to be louder and harsher than elsewhere and does not always translate into action on the ground. The foreign ministers have spoken directly in a telephone call held since the referendum, and agreed on the importance of maintaining open "communication channels" between them.

And China also has vested interests in both countries, particularly in oil projects.

Mediation from a major neighbour

The main regional power, Brazil, was quick to comment. President Lula said: "If there is one thing we don't want here in South America, it is war."

Lula acknowledges that the issue is not necessarily about a military confrontation, which is unlikely, but rather about an unpredictable move that could escalate the situation into a crisis.

Any Venezuelan military inevitably impede onto Brazilian territory, due to nature of the borderlands and the rugged terrain there. Lula has elevated surveillance on the borders.

He has contacted the two presidents to emphasise his objection to any "unilateral" actions. He included the word in a joint statement for all South American countries to back and also in the position of Russia, which is genuinely considered an ally of Maduro.

Lula also called for initial talks to be facilitated by CELAC, the Community of Latin American and Caribbean States, currently chaired by the President of Saint Vincent and the Grenadines, a small island nation. He pledged his support and offered to host meetings in Brasília when needed.

There is much riding on this personally for Lula, who cannot afford to fail over the issue after his unsuccessful diplomacy over the wars in  Gaza and Ukraine.

Maduro's motives

After the referendum, Maduro may have revealed his motives, saying: "Sooner or later, we will sit face to face with the leaders of Guyana and ExxonMobil"

He acknowledges that he cannot halt ongoing oil exploration, and licensing  and that he cannot occupy a neighbouring country, or annex 70% of its territory. The threats are more about making sure he can create enough attention and uncertainty over the months ahead to get a place at the negotiating table over the future of the lands and their rich resources.

Guyana's move to circumvent the Geneva Agreement by resorting to the International Court, while staying close to its allies – most notably the US – and cooperating with Brazil's mediation efforts, come as it recognises that it is outmatched militarily by Venezuela. Guyana's army only has 3,000 soldiers.

Brazilian police search cars on the border with Venezuela on December 8

But there are other ways it can influence the balance of power. Its biggest friend, the US, is due to renew the sanctions relief agreement for Venezuela in the coming months, which might bolster its negotiating position.

And so its approach is likely to involve direct negotiations under regional supervision to take into consideration Guyana's interests, resorting to the International Court with the stipulation that it upholds the Geneva Agreement and Venezuelan interests, or a hybrid approach encompassing both

Two presidents, two 2024 polls

Meanwhile, Presidents Biden and Maduro have their own strategic considerations with both leaders facing elections next year.

Biden is on the defensive:  He cannot afford exposure to any unpredictable move by Maduro over oil supply in the US's backyard as he takes on Trump at the polls. And so the White House takes part in military manoeuvres while also making sure Lula keeps the regional situation contained

Maduro is on the offensive: By bringing the issue of disputed lands to the forefront, he has established a new means of national unity, away from the country's revolutionary story. He has confused and divided the opposition, to the extent that they have had to back one of his policies for the first time since he took power.

Maduro is unlikely to invade. But he is equally unlikely to back down until this political "achievement" is first translated it into votes.

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