Column 200: Sovereignty in the Age of Oil
Introduction
The series began on May 26, 2017 as Oil and gas – The New Economic Horizon and was expected to run for twenty-five weeks. As the research deepened, it became Road to First Oil – Every Man, Woman and Child Must Become Oil-Minded, borrowing the Daily Chronicle exhortation brought to my attention by historian Dr Nigel Westmaas. Twenty-five columns became fifty, then one hundred, and this is number 200. I can feel cramp setting in.
That first column identified the legislative framework, taxation, corruption, the Sovereign Wealth Fund and the border controversy with Venezuela. It also recalled Cheddi Jagan’s 1986 warning against giving oil companies a “blank cheque” and putting Guyana’s independence and energy policies in the hands of transnationals. Nearly nine years later, Venezuela has moved from the margins to the centre, touching our territory, security, relationship with the United States and even the value of our petroleum. The question now is larger: how sovereign is Guyana in the age of oil?
In 1939, while British Guiana was still a colony, petroleum legislation vested the country’s petroleum resources in the State. The Petroleum Activities Act 2023 repeats the principle. In law, the petroleum is ours, but legal ownership should not be confused with effective sovereignty. Cheddi Jagan understood that danger. As Leader of the Opposition in 1986, he warned against putting Guyana’s independence and energy policies in the hands of the transnationals. Yet thirteen years later, the PPP Government under President Janet Jagan signed the 1999 Petroleum Agreement with Esso. No one then knew the scale of the Stabroek resource, but the irony is unavoidable: the party that warned against surrendering energy policy to transnationals entered the agreement that became the foundation for ExxonMobil’s dominant role.
Energy security and Energy sovereignty
Last week I considered President Ali’s proposed refinery, national oil company and increased fuel storage as questions of energy security. Guyana needs reliable supplies of petroleum products, but energy security is not energy sovereignty. Storage, a refinery and even a national oil company may improve security without giving Guyana effective control over production, technology, capital, markets or the geopolitical forces surrounding its petroleum.
We need look no further than Venezuela for the clearest warning. It nationalised its petroleum industry and possesses the world’s largest proven oil reserves, yet the United States showed through raw power and its influence over the critical elements of the petroleum sector – technology, finance, shipping, insurance and markets – that legal ownership does not guarantee the ability to produce and sell oil. Washington did not need to own the wells; power over the systems surrounding them was enough.
Now Washington is demonstrating the reverse power by helping to bring Venezuela back into the international petroleum system. This is about more than oil. Drawing Caracas away from Russia, China, Iran and Cuba is itself a major political and strategic prize, reviving in some respects the old Cold War contest for influence in the hemisphere.
For Guyana, that is transformational, though not necessarily entirely in its interest. American companies own approximately 75% of the Stabroek Block, with ExxonMobil as operator, while the United States is Guyana’s most important external strategic partner against Venezuela’s claim to Essequibo. The danger is not that America will abandon Guyana for Venezuela. Guyana has embraced Trump’s America so completely that Washington can now regard Ali’s cooperation as a given.
The consequence is that Guyana and Venezuela increasingly exist in the same hemispheric “ecosystem”, to borrow President Ali’s word – an ecosystem led by President Trump and administered through Secretary of State Marco Rubio. A transactional President may see two neighbouring countries tied to American power and capital and ask why their century-old controversy should disturb his larger hemispheric design. The message may simply be: you are both within my sphere of influence, so settle your differences and move on. For Guyana, that is where dependence becomes a sovereignty problem.
The risk is aggravated, paradoxically, by the very fact that Guyana properly chose the legal route. There are strong reasons for confidence that the ICJ will uphold the 1899 Award and confirm Guyana’s title to Essequibo, but a favourable judgment may not end the controversy. The Court can decide; it cannot enforce. If Venezuela rejects its judgment, Guyana would have to depend heavily on diplomacy and international pressure which, in practical terms, would mean above all the United States. The unsettling question is whether Guyana would still be free to insist on the full benefit of that victory if Washington prefers a negotiated political settlement.
There is an uncomfortable irony in the arrangement on which Guyana’s security depends. Jurisdiction is secure under the 1966 Geneva Agreement and the Secretary-General’s choice of the ICJ. Enforcement is another matter. If Venezuela refuses to comply, Guyana may turn to the Security Council, where the United States holds a veto. That is the same United States that withdrew from the Nicaragua case and later vetoed Security Council action seeking compliance with the Court’s 1986 judgment. Guyana’s legal position may be secure; its practical protection still depends heavily on crude power.
Ali’s sellout
The recent agreement under which Guyana will receive certain third-country nationals removed from the United States adds to the concern. Economics can hardly explain it. If not money, is it goodwill, strategic credit or insurance against Venezuela – or is this simply President Ali’s vulgar, unauthorised and unlawful attempt to find favour with Washington? In the process, he has placed Guyana in the same basket as Eswatini, Equatorial Guinea, Liberia and other states recruited into the Trump administration’s third-country deportation programme. Eswatini is receiving deportees under a US$5.1 million arrangement, while Liberia has agreed to accept as many as 1,200 third-country nationals.
This perhaps is the most discomforting development of all, coming on top of the broken promises at home. I believed the PPP/C when it pledged to renegotiate the 2016 Petroleum Agreement. In office, it abandoned that promise for “better contract administration”, while refusing to insist on protections such as ring-fencing and stronger fiscal terms. Production accelerated; State capacity and contractual protection did not.
Conclusion
Two hundred columns ago, I was filled with hope, expectation and confidence about what petroleum could mean for Guyana. Those have been shattered by the quality of leadership, the failure to build strong institutions, the amateurish and fragmented management of the sector, and the willingness to accommodate ExxonMobil and now Washington rather than insist consistently on the national interest. Too much rests on a handful of political personalities and too little on independent expertise, disciplined policy and institutions capable of standing up to interests far more powerful than Guyana.
A personal milestone of 200 columns means little against that record. We have oil, money and strategic importance, but supine leadership, little courage and too little institutional capacity to use the power we possess. Energy security is not sovereignty, and neither legal ownership nor an ICJ judgment can substitute for the capacity and will to defend the national interest.
expected this journey to last twenty-five weeks. It has lasted nearly nine years and produced 200 columns. With cramp and fatigue setting in, that is excuse enough to retire hurt. The bleaker thought is that the Ali Administration has already retired from the harder contests: building the institutions and expertise required to manage the sector, delivering the promised better contract administration, and, most importantly, exercising real sovereignty.