Venezuela Objects to Guyana’s Decision to Auction Offshore Oil Blocks

Written by Joseph Cain | September 24, 2023

---

On September 12^th, Guyana allowed bids from several international oil companies, including Exxon and TotalEnergies, for the right to explore 14 offshore oil blocks. Negotiations with the bidders will take place next month. However, neighboring Venezuela has voiced its displeasure with the Guyanese auction, arguing that Guyana does not have sovereign rights over the area and therefore cannot grant rights to third parties for oil exploration.  

Venezuela and Guyana have had a centuries long border dispute over the area involved and the International Court of Justice (ICJ) ruled in April that it had authority to decide on the case. Guyanese President Irfaan Ali has urged Venezuela to respect the decision of the ICJ, while stating that Guyana has the right to pursue economic activities within its sovereign territory.  

Since the discovery of oil in Guyana in 2015 by Exxon, oil production has risen to 1.2 billion barrels per day, outpacing Venezuela’s 2022 numbers of 700,000 bpd, the country with the largest proven oil reserves in the world. Additionally, the oil found in Guyana’s waters is a cost-effective oil to refine into low emission, high quality fuel, according to OilPrice. This in turn increases the attractiveness of Guyanese oil on the world market as fuel emissions restrictions increase globally. Guyana is beginning to reap the rewards of its oil discovery as evident by its rapid increase in GDP per capita from $5,600 dollars in 2015 to $19,000 dollars in 2022, well above the 2022 world average of $12,650 in 2022.