March 2, 2024
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OIL & GAS

Venezuela to Permit Oil Exploration in Disputed Territory, Sparks International Tensions

Venezuelan President Nicolas Maduro’s declaration on Tuesday, authorizing oil exploration in a disputed region with Guyana, has escalated tensions on the international stage.

The announcement followed a weekend referendum where voters rejected the International Court of Justice’s (ICJ) jurisdiction over the disagreement and endorsed the creation of a new state in the contested territory.

Despite Maduro’s insistence that the referendum is binding, the ICJ recently prohibited Venezuela from taking any actions altering the status quo in the oil-rich region according to Reuters.

Maduro, however, announced plans for state oil company PDVSA and state iron and steel maker CVG to establish divisions for the disputed area, named PDVSA Esequibo and CVG Esequibo, respectively.

Reuters says operating licenses for oil, gas, and mining exploration and exploitation in the Guayana Esequibaregion are set to be granted immediately.

Maduro further revealed his proposal for a new law to create the aforementioned state, demanding companies currently operating in the waters to vacate within three months.

Guyanese President Irfaan Ali denounced Maduro’s actions, describing them as a “blatant disregard” for the ICJ ruling.

“Guyana will be reporting this matter early in the morning. We will write the U.N. Security Council and the court,” Ali said in a national broadcast. “The Guyana Defense Force is on high alert … Venezuela has clearly declared itself an outlaw nation.”

The territorial dispute, covering 160,000 square km, was reignited by Venezuela in recent years, driven by the discovery of offshore oil and gas. The maritime border between the two nations is also contested.

Exxon Mobil, leading a consortium, began oil production off Guyana’s coast in 2019, with exports commencing in 2020. Despite the tensions, Guyana assured investors that their interests were secure, backed by support from the international community.

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