A quiet frontier in South America is rapidly becoming one of the world’s most volatile energy flashpoints. The disputed region of Essequibo, a sparsely populated expanse administered by Guyana but claimed by Venezuela, has seen tensions simmer for years. But a combination of geopolitical ambition, economic desperation, and energy opportunity is now threatening to tip the standoff into open conflict.
At stake is one of the most valuable stretches of territory in the world—an area that, until recently, few outside the region had heard of. Essequibo, which comprises nearly two-thirds of Guyana’s landmass, was thrust into the global spotlight after ExxonMobil’s 2017 discovery of the Stabroek Block offshore reserves, estimated at over 11 billion barrels of recoverable oil. For Guyana the find transformed the country from economic backwater to a regional energy giant almost overnight.
The newfound wealth has also revived Venezuela’s long-standing claim to the region, a grievance dating back to colonial arbitration rulings of the late 19th century. Caracas has never fully relinquished its claim, but it was only after the oil discovery that Venezuela began actively pressing the issue. Since 2022, under President Nicolás Maduro, Venezuela has dramatically escalated its rhetoric and actions—announcing referenda, redrawing maps, and even moving military assets toward the border.
Most alarmingly, Venezuela has begun to mimic the playbook of its closest geopolitical ally—Russia. Much like Russia’s 2014 annexation of Crimea using unmarked “little green men,” Venezuela appears to be laying the groundwork for a slow, deniable incursion into Essequibo. The playbook combines official rhetoric with irregular warfare tactics, allowing for plausible deniability while steadily undermining Guyana’s control.
The first major signal of this new phase came last year when Maduro’s government held a referendum to “reclaim” Essequibo. Despite international condemnation, the vote passed and led to the formal creation of a new Venezuelan “state” encompassing the territory. Venezuela began offering citizenship to Essequibo’s residents and launched efforts to organize elections in the region.
In March 2025, a Venezuelan naval gunboat intercepted ExxonMobil operations in Guyanese waters, accusing the U.S. oil major of encroaching on Venezuelan territory. The incident was widely seen as a warning shot—not just to Exxon, but to any foreign investors backing Guyana’s energy future.
But the most ominous sign yet came on May 15, when Guyana’s military reported three armed attacks in a single day on its patrols along the Cuyuni River, a critical stretch of the Guyana–Venezuela border. According to the Guyana Defence Force, unidentified gunmen in civilian clothing opened fire on soldiers in three separate engagements. No casualties were reported, and the Guyanese military responded with what it described as “measured force.”
The attacks were chilling in their timing and coordination. While the assailants were not officially identified, officials in Georgetown and most international observers believe they were Venezuelan operatives or proxies acting on Caracas’s behalf. The region is not known for organized crime or guerrilla activity, and no local insurgency has taken root—at least not yet.
This wasn’t the first time violence erupted in the contested zone. In February, another attack left two Guyanese soldiers critically injured. That incident, too, was blamed on Venezuela-linked forces.
While the skirmishes may seem minor in isolation, taken together they mark a dangerous pattern of escalation. What’s emerging is a shadow conflict—gray-zone warfare that avoids the threshold of open war while steadily eroding Guyana’s control over Essequibo. The danger, analysts warn, is that this slow-motion campaign could culminate in a de facto annexation, much like Crimea, before the international community has time to respond.
The Guyana Defence Force fields just over 3,000 active personnel with limited air, land, and naval capabilities. Venezuela, by contrast, commands over 100,000 troops, around 200 tanks, dozens of combat aircraft, and a sizable paramilitary force—making any conventional war a one-sided affair.
However, during a visit to Georgetown in March, U.S. Secretary of State Marco Rubio cautioned that any Venezuelan attack on Guyana or ExxonMobil would mark “a very bad day” for Caracas, hinting at serious consequences. Venezuela swiftly condemned the remarks.
The real question now is how the international community, and especially the United States, will respond. ExxonMobil’s deep involvement gives Washington both an interest and a stake in the dispute. But the broader issue goes beyond oil. A successful Venezuelan land grab would further erode the already fragile post-Cold War order. It would also send a message to authoritarian regimes worldwide: territorial revisionism is back—and it works.
Guyana has vowed to defend its sovereignty and is seeking stronger security partnerships. But unless it receives military support or any other type of real security guarantee from the U.S., Georgetown will struggle to hold the line alone.
For now, Essequibo remains under Guyana’s flag. But the shadow of Caracas is growing—and so is the risk that South America’s next war may erupt in one of its least known, but most strategically vital, regions.
By Charles Kennedy for Oilprice.com
U.S. Oil Giants Fight Over Guyana’s 11-Billion Barrel Treasure Trove
By Tsvetana Paraskova - May 27, 2025,
- Chevron’s bid to buy Hess’s stake in the Guyana projects is being challenged by Exxon and CNOOC.
- This week, a private arbitration panel in London began hearing the arguments of U.S. supermajors ExxonMobil and Chevron regarding their rights to one of the world’s most lucrative oil projects.
- Both Chevron and Exxon have expressed confidence in their right to pursue Hess’s stake in Guyana.
This week, a private arbitration panel in London began hearing the arguments of U.S. supermajors ExxonMobil and Chevron regarding their rights to one of the world’s most lucrative oil projects.
Guyana’s Stabroek block has an estimated 11 billion barrels of oil in place discovered so far by the consortium of ExxonMobil, U.S. Hess Corp, and CNOOC of China. The high-volume, low-cost development offshore the South American country, which started production just five years ago, is already pumping more than 660,000 barrels per day (bpd) of crude. Exxon is the operator of the block with a 45% stake. Hess holds 30%, and CNOOC has the remaining 25% stake.
The Dispute
But in 2023, Chevron proposed a $53-billion deal to buy Hess Corp and thus take Hess’s assets in the Bakken in North Dakota and the 30% stake in Guyana’s offshore oil field—a top-performing asset with the potential to yield even more barrels and billions of U.S. dollars for the project’s partners.
Production capacity in Guyana is expected to surpass 1.7 million barrels per day, with gross production growing to 1.3 million barrels per day by 2030, Exxon says. Guyana is now the third-largest per-capita oil producer in the world, according to the U.S. supermajor.
Proceeds for the consortium are also rising with growing production, even at current oil prices, because the Guyana Stabroek block is estimated to have a breakeven oil price of about $30 per barrel.
Chevron’s bid to buy Hess’s stake in the Guyana projects is being challenged by Exxon and CNOOC, who claim they have a right of first refusal for Hess’s stake under the terms of a joint operating agreement (JOA) for the Stabroek block. Hess and Chevron claim the JOA doesn’t apply to a case of a proposed full corporate merger.
And so, the dispute went to arbitration, and the once amicable relationship between Exxon and Chevron’s top executives has vanished, sources tell The Wall Street Journal.
The arbitration initiated by Exxon and CNOOC has delayed the closing of Chevron’s bid to buy Hess by more than 18 months. There is a very good chance that the matter will be resolved – either in favor of Chevron or Exxon – by the end of the year. The three-judge arbitration panel began hearings on Monday behind closed doors. The panel is expected to rule within 90 days from the end of the hearings, so the fate of Chevron’s $53-billion acquisition of Hess could be clear by August or September this year.
The Prize
While Chevron’s deal to buy Hess has stalled, ExxonMobil finalized the $60-billion acquisition of Pioneer Natural Resources, which boosted Exxon’s presence in the Permian. It was growth in the Permian and offshore Guyana that helped Exxon beat analyst estimates in its Q1 earnings.
Both Chevron and Exxon have expressed confidence in their right to pursue Hess’s stake in Guyana.
However, Chevron has much more to lose than Exxon if it loses the arbitration.
The outcome of the arbitration likely depends on the panel’s interpretation of several words in the joint operating agreement in its part of pre-emptive rights, sources close to the process have told the Financial Times.
The stakes in this case couldn’t be higher for Chevron, which is looking to gain a foothold in a very profitable offshore basin that is set to boost oil production exponentially over the coming years.
Chevron is betting on the multi-billion acquisition of Hess to boost its assets with high-quality Guyana acreage, where billions of barrels of oil equivalent have been discovered.
Chevron’s reserves replacement ratio has declined in recent years, and its oil and gas reserves have now reached the lowest level in at least a decade, according to a Reuters analysis.
During the past 10-year period, Chevron’s reserves replacement ratio was 88%, it said at the Q4 earnings call in January.
A ratio below 100% means that Chevron is depleting reserves faster than it can replace them.
So far this year, Chevron has expanded production in Kazakhstan and started up production at the Ballymore oil project in the U.S. Gulf of Mexico.
But it is betting on Guyana for a high-volume, high-profits development.
In 2023, ExxonMobil, Hess, and CNOOC booked a combined $6.33 billion in net profit for their joint oil operations offshore Guyana, according to Guyanese government data. Hess’s share was $1.88 billion of this income—and that was before the start-up of new offshore production platforms after 2023. The combined net margin of the Stabroek block co-venturers was 56% in 2023, higher than Nvidia’s 49% net margin.
The Stabroek block co-venturers are expected to gain as much as $182 billion over the next 15 years from Guyana’s oilfields, per Wood Mackenzie estimates cited by FT.
“Guyana is one of the most prized oil and gas projects on the planet,” Wood Mackenzie analyst Luiz Hayum told FT.
“It was developed in record time, provides comparatively low-emissions oil at a break-even price that is below $30 a barrel, which makes it super profitable.”
By Tsvetana Paraskova for Oilprice.com
