OPINION: Venezuela and Chevron, Guyana and Exxon: the good, the bad, and the worse

Last Updated on Wednesday, 30 November 2022, 10:07 by Denis Chabrol

By GHK Lall

America is back in Venezuela.  Well, Chevron has been officially cleared to setup shop across the border to make public what was happening on the sly.  After all these years, I am still trying to put my finger on the pulse of America, though I had anticipated this, and said so.  It was all for democracy here, one with a single component only (elections), while all of its other noble freedoms in the domestic terrain resemble some of what goes on in friendly Venezuela.  Democracy of a kind here; socialism, Bolivarianism, despotism over there; they are all the same thing to America.  I get it: neither friends nor foes, only permanent interests perpetually.  My interest is local.

This Chevron development is both good, bad, and worse for Guyanese-still little respected, but smartly courted-now fabulous oil owners and oil producers.  The good news is all for the PPP Government, President Ali, and the Hon. Vice President.  The pressure is off from both leaders to mug and shakedown Exxon for some spare change from the horrendous 2016 oil contract.  Exxon now has a readymade fallback option on its forehead: Venezuela.  Put differently, should President and Vice President find the testosterone to confront (preferably consult) Exxon for an improvement in contract terms, I guarantee there will be noises, signals, hints, mentions, references, allusions from its people that Venezuela is waiting, with doors and arm open wide.  Thanks to Joe Biden, triumphant returning Yankees are persona grata.  Guyana can go to hell, and get rich (or drunk) drinking its oil.

Excellency Ali and the Vice President get to sit on their hands, and say that they have no choice, but continue with the 2016 contract, as is; their prior curses of it all but forgotten.  Exxon also benefits handsomely since it can now run any rackets it desires here, and stuff any sock down the throats of kowtowing PPP Government leaders, and the multitude of Guyana’s now clearly subject peoples reduced to oil serfdom.  If nothing else, the Americans must be admired for thinking of everything, and covering both sides of the wicket, including doctoring the pitch, compromising the umpires, and buying out a section of the spectators (cheerleaders cum voters).  Now try this one that just dawned on me: now that Venezuela is not the dreadful, uber-pariah that it has been made out to be, it would be interesting to see what the ICJ delivers for hallowed judicial acumen and wisdom.

The bad news for Guyanese is that whatever Chevron does, however strongly it hits the ground running in the muddy Orinoco, it would be about two years before Venezuelan oil really starts to contribute towards easing the world’s oil woes.  Yes, the oil infrastructure of our greedy neighbors is in such a flabby and dilapidated state due to punishing American sanctions.  Let it be a warning to unwise and uncooperative Guyanese political leaders.  What this means is that despite conquering Chevron in Venezuela, Guyana’s oil would still have its appeal, place, and value for some time to come.  The problem for locals is that they are stuck with that abomination of a contract, despite oil finds being 10 times more than when it was signed.  I am trying for a gentle way to say this: sorry, no extra money from Exxon, and that is the end of an already sad story.

And for those Guyanese who had already thrown up their hands in despair, I regret having to share some still worse news.  If I recall accurately, Chevron was the American oil company that had perfected the technologies and techniques to deal efficiently with Venezuela’s heavy, tarry oil.  I am certain it was not Exxon, and doubtful that it was Conoco Phillips.  Regardless, it is ominous for Guyana that Chevron is the one given the greenlight to go back to red carpet Venezuela.  Here is why.

Venezuela has the world largest proven reserves of crude; heavy, high sulfur, sour crude.  Chevron puts its technology magic to work in quick order, and the end result is that Guyana’s 11 billion barrels is reduced to a second-rate player, just like that in the old, proverbial New York minute.  We are talking about almost 300 billion barrels of proven, untapped crude in those basins around Maracaibo.  That is not a lake, it is the Pacific Ocean of oil, and right next to Guyana.  Of all the dratted luck!  Before any panic steps in, our oil is still premium grade, and bargain basement cheap to boot.  Our oil will sell, but not on our terms, and demand for it could take a backseat when Venezuelan oil hits its stride, and the US market, which now has an official monopoly on production.  Talk about security of oil supply.  I did sound the bell, not to count out our neighbors.  OPEC+ can keep its oil, and stuff it up where it belongs.  Something had to give, and sanctions and Venezuela gave way.  What is good for Venezuela is bad for Guyana.  I leave this parting note: our labor market just eased and worsened.  Many Venezuelans will be packing their bags.