Lloyd’s adds Guyana’s offshore sector to war risk list

As tensions flare on the border between Venezuela and the tiny nation of Guyana, Lloyd’s Joint War Committee has added Guyana’s burgeoning offshore sector to a list of high-risk areas, alongside such well-known hotspots as the southern Red Sea and the Black Sea.

In a Listed Areas update issued Monday, JWC said it was adding Guyana, but only for connections to offshore facilities within the Guyanese EEZ between the 12-mile and 200-mile lines (outside territorial waters). It’s an increasingly busy region: ExxonMobil is developing multiple offshore oil fields in its productive Stabroek Block lease offshore Guyana and is deploying multiple FPSOs to boost production in the short term. Vessel traffic includes OSVs and large tankers that stop at Exxon’s FPSOs to load crude.

Venezuelan President Nicolas Maduro has raised tensions along the border by reasserting old claims to Guyana’s Essequibo province. This region of undeveloped rainforest makes up two-thirds of Guyana’s land area but a tiny fraction of its population. It holds valuable prospects for oil and gold, and Maduro has ordered Venezuelan state-owned natural resources companies to seek opportunities in the region — on Guyanese territory.

The dispute dates back to colonial times, when Guyana was known as British Guiana. British administrators chose to demarcate the border west of the Orinoco River in 1840, then reached an American-brokered agreement with Venezuela that formalized that border in 1899. Venezuela protested in 1966, winning a promise from Britain to discuss the matter further or refer the dispute to the UN. In 2020, the International Court of Justice agreed to take up Guyana’s case to settle the dispute once and for all.

Maduro says the ICJ has no jurisdiction and has not waited for the court to finish hearing. This year, he held a referendum asking whether Essequibo should become part of Venezuela. The result, according to Maduro’s authoritarian state, showed overwhelming Venezuelan support for the idea.

The referendum was accompanied by small military movements along Venezuela’s border, raising concerns that Maduro might attempt military intervention. While Venezuela’s forces have been depleted by years of financial deprivation, Guyana has little, if any, ability to resist a military attack and maintains only a handful of naval patrol vessels to protect its waters.

Guyanese President Irfaan Ali stressed that his government “reserves the right to work with all our partners to ensure the defense of our country.” The Biden administration has ordered a review of Venezuela’s military movements to better assess the likelihood of conflict.

Last week, a summit between Maduro and Ali seemed to cool things down a bit. In a conference room at the airport in Kingstown, St. Vincent, the two men shook hands and agreed to peacefully mediate the dispute. They agreed to differ on the validity of the ICJ proceedings and noted Venezuela’s objections.