This is the first of a two-part series on the ongoing territorial-judicial saga between Guyana and Venezuela. Here we provide some recent developments on Guyana’s oil exploration and production landscape, which have increased the stakes for both nations. In Part II, we examine some of the security investments the government is making while the judicial drama plays out.
Waiting, but …
In a two-part series in OilNOW last fall I described the Guyana-Venezuela territorial drama as a waiting game, in that it evokes memories of the award-winning play Waiting for Godot by the famous Irish playwright Samuel Beckett.[1] The waiting game began in 1962, when Venezuela first formally challenged the validity of the Paris Arbitral Award that had settled the dispute between the Bolivarian Republic and Great Britain over the colony then called British Guiana in 1899. The drama assumed new dimensions when, with green-lightening by the United Nations Secretary General, Guyana took the matter to the International Court of Justice (ICJ) in 2018 after other resolution efforts pursued over several decades had failed.
In keeping with its rules, the Court needed to consider whether it had jurisdiction to hear the case. After deciding in December 2020 that it did, indeed, have the relevant jurisdiction, in March 2021 it gave Guyana until March 8, 2022, to submit its Memorial (case brief) and Venezuela until March 8, 2023, to present its Counter-Memorial. The expectation was that, all things considered, a ruling on the substantive case would be made by March 2024.
However, the waiting game assumed new dimensions last June when Venezuela filed preliminary objections to the admissibility of Guyana’s petition. Under ICJ rules, the proceedings on the merits had to be suspended. Guyana was then given until October 7, 2022, to file a response to the objections and the Court held hearings on the preliminary objections from November 17 through November 22, last. The Court likely will render its judgment on Venezuela’s objections by the end of this coming April. So, the waiting game continues.
Waiting is not a strategy, though. As such, the government has been aggressively pursuing its national development goals, including extracting more of its newly found natural resource and investing some of the revenue derived from it. As Finance Minister Ashni Singh reported in his January 16, 2023, Budget Speech in the National Assembly, 2022 was an exploration banner year: 11 new wells were drilled, 10 of them being in the now famous Stabroek Block, which extends over 6.6 million acres (26,800 square kilometers) of maritime space. The new discoveries brought the total discoveries to 40, with 35 in Stabroek alone. Moreover, in December 2022, the authorities launched a new Licensing Round, which will run through this coming April.
Production continued apace, allowing for 102 lifts of crude oil, with revenues augmenting the sovereign wealth fund, called the National Resource Fund. Last year the Fund received just over US$1,099 million. After the transfer of US$607.6 to the government’s budget to fund various initiatives, the Fund had a 2022 end-of-year balance of US$1,271.8 million. The new year brought new bounty to the Land of Many Waters, with an additional discovery on January 23 in the Fangtooth SE-1 well, also in the Stabroek Block.
Towards 1 million barrels per day
Also noteworthy is that the Payara project expected to begin production later this year, yielding some 220,000 barrels per day, and another project, named Yellowtail, is expected to come on stream in 2025 and produce about 250,000 barrels of crude per day. This should be followed by the Uaru project, which is anticipated to produce another 250,000 barrels per day following start-up in 2027. As a result, the country is set to produce about one million barrels per day before the sun sets on the current decade.
Although Venezuela’s energy profile dwarfs that of Guyana, South America’s sole English-speaking republic now boasts having proven more than 11 billion barrels equivalent of recoverable oil and gas. In all likelihood, this figure will increase as exploration continues to reveal the existence of more black gold. Consequently, Guyana is well positioned to reap enormous wealth, which would enable the nation to be propelled into a development stratosphere not contemplated a few years ago. Indeed, last year the non-oil real GDP growth was pegged at 11.5 percent and the overall economy was estimated to grow by some 62 percent, making Guyana’s economy the fastest growing in the world.
There is, therefore, confidence about robust economic growth and long-term revenues from oil. Last month the finance minister assured parliament that “there will be 136 lifts of profit oil from the Stabroek Block in 2023. Within this, Government is projected to have 17 lifts of profit oil from the producing FPSOs (Floating Production, Storage and Offloading vessels), earning an estimated US$1,406.6 million in profit oil and US$225.2 million in royalties in 2023.”[2]
Thus, the waiting game continues. But Guyana’s leaders do not have the luxury to simply wait on the ICJ decision; they have the obligation to attend contentiously to the welfare of the nation, which includes addressing matters crucial to its national interest, a key aspect of which pertains to its territorial integrity. In this respect, in a May 2021 OilNOW opinion I argued that pragmatism necessitated the pursuit of complementary imperatives – things that need to be actioned, not just spoken about. For me—then and now—three key imperatives pertain to public education, diplomacy, and investing in security assets.[3] Commentary on the first two are reserved for another time, but the third imperative—investment in security—will be the subject of attention in Part II.
[1] See “Venezuela’s latest move in its waiting game with Guyana, pt. 2,” OilNOW, September 7, 2022, available at Venezuela’s latest move in its waiting game with Guyana, pt. 2 | OilNOW.
[2] See ”Budget Speech 2023 – Hon. Dr. Ashni Singh, M.P., Senior Minister in the Office of the President with responsibility for Finance,” available at Budget Speech 2023 – Hon. Dr. Ashni Singh, M.P., Senior Minister in the Office of the President with responsibility for Finance | Parliament of Guyana.
[3] See “Three key imperatives new oil producer Guyana should pursue,” OilNOW, May 28, 2021, available at Three key imperatives new oil producer Guyana should pursue | OilNOW.
