The US State Department Dec. 4 said no decision has been made on reimposing sanctions on Venezuela following the passage of a referendum to annex neighboring Guyana's Essequibo region, in a dispute that could threaten war between the oil-rich South American countries.
Venezuelan Dec. 3 approved the referendum to annex the Essequibo. The region contains about two-thirds of Guyana's population and more than 15 billion barrels of recoverable reserves, discovered off the country's coast in recent years. Venezuela also demands that Guyana grant oil concessions in maritime spaces not delimited between both countries.
Venezuela has laid claims to the region for more than 100 years, saying it's historically considered Venezuelan territory. The border area was determined by an 1899 treaty between Venezuela, Brazil and the UK when Guyana was the colony of British Guiana. The countries signed several treaties establishing borders in the region, including the latest one in 1965. Venezuela, the UK and British Guiana in 1966 signed an agreement that established mechanisms to review the controversy and seek satisfactory solutions.
"The 1899 award that determined the land boundary between Venezuela and Guyana should be respected unless or until the parties come to a new agreement or a competent legal body decides otherwise," Matthew Miller, a State Department spokesperson, said at a briefing. "So we would urge Venezuela and Guyana to continue to seek a peaceful resolution of their dispute. This is not something that will be settled by a referendum."
The president of Venezuela's National Electoral Council, Elvis Amoroso, who presented the final results in an event with President Nicolas Maduro and members of the National Assembly on Dec. 4, said voters overwhelmingly supported Maduro's position, with, for instance, over 96% agreeing that the 1899 treaty was "fraudulently" imposed and agreeing with the creation of an Essequiba state, where current residents would be granted Venezuelan citizenship.
Maduro said that the results of the referendum mark "the course I will take. There is no doubt that it is a popular mandate, and it has set a new stage in the fight for our Guayana Essequiba. Now we are going to recover Venezuela 's rights over the Essequibo," Maduro said in an event held at the National Electoral Council in Caracas, which was broadcast on state television.
While Maduro had called more than 20 million Venezuelans to the referendum on Dec. 3, local media reported low attendance at voting centers.
An escalation by Maduro raises the risk that the US reimpose sanctions on Venezuela. Those sanctions were lifted on Oct. 18 on the condition that Venezuela show some progress in election reforms by the end of November.
"They have not followed through on their part of the bargain," the State Department's Miller said. "There are two additional steps that we want to see them take. We want to see them release political prisoners and we want to see them release wrongfully detained Americans. That was part of the framework agreement that we had come to with them. They have not carried out their part of the agreement. We urge them to do so. But at the same time, we are considering the matter and will suspend some of the sanctions relief that we put in place earlier this year if we determine that adequate progress to the commitments they made to us have not been made."
The International Court for Justice, currently reviewing the territorial dispute, on Dec. 1 ordered Venezuela not to make any border changes related to the referendum.
S&P Global Commodity Insights estimates that Venezuela could increase production capacity by roughly 100,000 b/d from the lifting of sanctions. Venezuelan crude production has risen to 805,000 b/d in November, up by 45,000 b/d from October, according to a production report from state-owned PDVSA seen by S&P Global.
Brazil's Lula calls for 'common sense'
Brazilian President Luiz Inacio Lula da Silva, meanwhile, has called for "common sense" amid the territorial dispute.
"The only thing that South America doesn't need now is confusion," Lula said Dec. 3 on the sidelines of the UN Climate Change Conference in Dubai. "I hope that common sense prevails. On Venezuela's side and on Guyana's side."
Brazil is heavily involved in mediating the dispute and has warned Venezuela that the country will not be allowed to use Brazil's territory to invade Guyana, according to government officials. Celso Amorim, Brazil's former longtime foreign minister and a key Lula aide, was recently dispatched to Caracas in an effort to reduce tensions.
Brazil's Army, meanwhile, said Nov. 30 that it would send a contingent of 60 soldiers to the tri-border region to reinforce security.
The dispute has heated up in recent years after several major oil discoveries were made in the Stabroek Block off Guyana's coast. ExxonMobil, which holds a 45% operating stake in the block, and its partners discovered more than 11 billion barrels of recoverable reserves in a series of discoveries. Oil finds have also been made off the coast of neighboring Suriname, while French Guiana also is selling offshore exploration and production blocks in the region.
The equatorial margin region that follows South America's northern coastline is considered one of the world's last major oil and natural gas exploration frontiers. Brazil also wants to drill in the region, but environmental regulators have so far rejected requests for drilling permits from state-led oil company Petrobras.
Lula has enjoyed good relations with both Guyana and Venezuela during his administrations. His administration worked diligently with Brazilian state-led oil company Petrobras and Venezuelan officials in the early 2010s, when Petrobras was attempting to build a refinery with Venezuela's state PDVSA. PDVSA eventually exited the project to build the Refinaria do Nordeste, or RNEST, refinery in Pernambuco state after it failed to reach an agreement on investment commitments and oil supplies. RNEST was originally designed to process heavy Venezuelan grades.
RNEST started operations in December 2014, with a single processing train handling about 115,000 b/d. Petrobras plans to complete RNEST's second processing train, which will raise total capacity to 260,000 b/d by 2028.
