(Miami Herald, 23.Mar.2022) — President Biden recently sent a team of senior U.S. officials to Caracas for talks with Venezuelan dictator Nicolás Maduro about a possible oil deal to help bring down gas prices in America. But Biden should instead be sending his envoys to a Venezuelan neighbor that could become a much more promising U.S. oil supplier: Guyana.
Few people know this, but recent oil discoveries in Guyana are expected to turn that country into one of Latin America’s biggest oil producers over the next five years. But, incredibly, the U.S. government seems to be blocking Guyana — a democracy — from developing its recently discovered oil fields instead of helping it.
Guyana is projected to produce 350,000 barrels of oil a day by mid-May. Oil production is further projected to skyrocket to 800,000 barrels a day in 2025, and to 1.2 million barrels a day by 2027, according to Exxon Mobil Corp.
By comparison, Venezuela’s oil production has plummeted to 800,000 barrels a day, and it could take five years and tens of billions of dollars in new investments for it to start rising significantly, energy experts say.
A country of only 790.000 people, Guyana is projected to become the world’s top per capita oil producer by 2035, according to the Americas Market Intelligence research firm. Energy experts say that Guyana could help overcome oil-production declines in Venezuela, Mexico and Colombia, and that its oil is much lighter, of much better quality and less polluting than Venezuela’s.
But according to Guyana press reports, the Biden administration in October denied Guyana a $180 million Inter-American Development Bank (IADB) loan to further expand its oil industry.
Guyana’s daily Stabroek News reported on March 7 that the U.S. delegate to the IADB had nixed the lending project after a two-year application process, citing new U.S. environmental regulations to curb new loans for fossil-fuel production.
The newspaper quoted Robert Albiez, the chief financial officer of the Guyana Shore Base Inc. (GYSBI) offshore oil services firm as saying that the Biden administration had blocked new loans for his country’s oil production not only at the IADB, but also at the International Monetary Fund and the World Bank. “The U.S. is using their leverage in their position as voting members on all of those boards to block any support” for Guyana’s oil industry, Albiez told the newspaper.
Officials close to the negotiations say Guyana’s oil-production plans with U.S.-backed loans were conditional on the country adopting relatively high environmental standards. By comparison, Venezuela’s current oil industry is an environmental disaster.
They also say that if the United States doesn’t support Guyana’s booming oil industry, China will become the biggest economic player in the country. That could weaken Guyana’s democratic institutions and potentially lead to a new petro-dictatorship, they say.
China already has a 25% stake in Exxon Mobil’s holding group that controls Guyana’s Stabroek oil fields. State-owned Chinese companies have also reportedly invested heavily in Guyana’s construction sector, including $100 million in the country’s capital signature hotel, the Pegasus.
IADB President Mauricio Claver-Carone declined to comment on the specifics of the bank’s loan negotiations with Guyana. But he told me that, “Guyana’s energy sector can be an important opportunity for U.S. trade to help offset oil imports from Russia in the future, while developing sustainably to meet global climate goals.”
As I wrote recently, I’m still skeptical that, after the political backlash that followed the Biden administration’s exploratory talks with Maduro on March 5, there will be any U.S.-Venezuela oil deal in the near future.
But if world oil prices continue to rise because of Russia’s invasion of Ukraine and Biden decides to lift oil sanctions on Venezuelan oil imports, he would be making a major mistake. It would send a message to Maduro and all other petro-dictators that, if they just hang on to power long enough, the United States and other Western democracies eventually will come begging for their oil.
If Biden is considering sending his team of negotiators back to Venezuela for a new round of talks, he should order them to change their airliine tickets right away, and have them fly to Guyana.
By Andres Oppenheimer