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OPINION: That missing US-Venezuela factor in Guyana’s oil dreams

by GHK Lall

Guyanese dream big rich dreams.  Their dreams are thick, they are light, they are sweet, and they are crude.  Already it should be clear that the recurring dreams are about that oil in the mud over there.  In the midst of all these fantasies, I believe that a major variable has not been considered in the least.  Thus, I must now proceed to douse the runaway enthusiasms by throwing water on the oil, cold water.

Before going further, although there is a different take on some of the oil positions advanced by others, one can only laud the sober, oftentimes piercing calculations and concerns registered.  Having said this, the thinking is that with all of the foci on resource curse, Dutch disease, believed corruption, and potential mismanagement, a powerful possible reality has been totally dismissed. It is now a given that the oil is in the seabed, that production is scheduled to commence in 2020, and that if handled cleanly, the country should be-would be-a better place.  All that is well and good so far, but then here comes the hard part that ought to be factored into domestic visions at every level.

First, America always prioritizes what it considers vital interests, and then moves doggedly and smartly to maximize its position.  Many times, it does not follow Marquis of Queensbury scripts.  Second, it can be a commanding petroleum power once again with official access to all that Venezuelan oil languishing in turmoil and waiting for the taking.  Third, those same neighboring reserves are reported to be among the world’s largest, if not the largest.  Fourth, US production and management, if not control, of Venezuelan oil would add serious economic muscle and luster to American projections of power.  Fifth, it goes a long way in healing the scars and humiliation meted out to America through Exxon by Venezuelan leaders.  Sixth, it could signal the return and resurgence of American influence in a region it still considers its own lake, and in which it has been on the ropes for a while now.  And seventh, there could always be the Guyanese oil as a strategic fallback reserve to tap into should things not work out.

The belief is that for all of those reasons, the return of an American petroleum presence in the Maracaibo Basin could effectively translate to the Corentyne Basin oil discoveries being relegated to the back-burner of low production, or non-production.  The additional oil from Guyana and Venezuela could mean a possible market oversupply (when all participants are aggregated) and depressed prices.  That could be bad for profitable production from Guyana, and put pressure on break-even levels; it places a stay on starting pumping date, and a hold on those dreams referenced. All of this is given short shrift in the raging excitements that each new day brings.

US access to Venezuelan oil is crucial and much sought after in spite of discovery here and disillusionment over there.  All oil related developments here exacerbate Venezuelan anxieties and chagrin at the position in which that country is mired.  Guyana’s discoveries only add fuel to the flames, and each new positive here weighs heavily on neighbors.  Oil is the way out and that points to the Americans, if the greatest return is to be extracted; already their voices and influence are being heard and felt in election give and take.  American nod and blessing can go far to settle some of the tumults raging.  Moreover, a favorable and timely outcome could help Uncle Sam to confront, if not diminish somewhat, the increasingly powerful Russian Bear and its position as the top global producer, and all the muscular influence that comes with that territory.

In summary, I am saying that a lot could materialize between now and 2020 both here and in Caracas; and in Foggy Bottom, too.  The Americans have a history of going with what is heaviest on their scale of calculations.  Stated differently, it looks out for what is best for itself and let the fallout sort out itself.  Friends thinking of themselves as close have been jilted before.  It is why I think that local failure to incorporate the Venezuelan factor in Guyana’s oil projections and dreams are flawed.  It could be fatal, at least in the short run; because when push comes to shove and a hard choice has to be made, the Venezuelans come out ahead of Guyana every time.  From an American perspective, it is an easy decision., given the quantity of oil, and all that goes with t