Venezuela, Guyana tensions rise after ship seizure

The Venezuelan and Guyanese governments are set to meet Thursday to discuss the fate of a survey ship, used by oil firm Anadarko, which was seized from Guyanese waters last Thursday. Venezuela accused the ship of violating its territorial waters, while Guyana has called the “unprecedented” move a serious threat to security. The diplomatic meeting set to take place in Trinidad & Tobago is aimed at forestalling any further confrontation between the two nations, whose unresolved borders have been a source of conflict for over a century.

According to Guyana's foreign ministry, Venezuelan ship Yekuana ordered the vessel RV Teknik Perdana, which Caracas deemed to be in its Exclusive Economic Zone, to stop surveying and subsequently escorted it to the island of Margarita. The ship was being used by Texas-based Anadarko, who were awarded a deep-water exploration licence for the Roraima block by Georgetown in June 2012. The company said it was “co-operating fully” with both governments, the US Coast Guard and embassy officials.

The discovery back in 2011 of significant hydrocarbons deposits offshore French Guyana has dramatically increased the presence of IOCs prospecting for fields in the north eastern region of South America. Since then, a Venezuelan naval detachment has been placed in the disputed Essequibo area, located between the Cuyuni River to the west and the Essequibo River to the east and covering 159,500 km2, to ward off Guayanese patrols.

The maritime boundary between the two Latin American nations is unsettled largely because the land boundary between the two is still contested. In the nineteenth century, the border was effectively drawn up by the British, which became a bone of contention with Venezuela. US-backed arbitration in 1899 set a line largely in Britain's favour, but the claim was revived in the 1960s.

Since becoming independent in 1966, Guyana has administered the territory, but Venezuela insists that the boundary is a colonial hangover which is null and void, and refers to the disputed area as a “zone of reclamation”. The recent ship seizure is unlikely to escalate into anything serious, with both sides working towards a cordial, diplomatic resolution, but until the outlines of a settlement are reached, it introduces a further degree of uncertainty into regional oil and gas exploration.

CGX resumes operations at disputed Guyana well

Toronto-based explorer CGX has restarted drilling at the Eagle 1 well off Guyana, after a seven-year delay caused by border disputes between Guyana and Suriname. The resumption comes as part of increased interest in the oil and gas prospects off the northern coast of South America.

CGX, which has a 100% stake in the Corentyne licence where the Eagle well is located, restarted operations on 9 February. CEO Steve Hermeston said in a statement that the resumption “marks a significant milestone in the history of CGX”.

Drilling was suspended in June 2000, when Surinamese naval forces ordered a CGX rig to leave the area, accusing it of drilling in Surinam's waters. The area in dispute, the Guyana-Suriname basin, is believed to hold major gas and oil deposits.

The two sides contest the exact territorial line through the basin and the Corentyne river which empties into I – both parties aimed to get the largest possible share of the basin. In 2004, smarting from the suspension of the CGX contract, took the case to a tribunal operating under the auspices of the UN Convention on the Law of the Sea.

The five-member tribunal issued a ruling in September 2007 which allowed both sides to have access to the basin and the river, but gave Guyana a larger share of the basin itself: 12,800m2 compared to Suriname's 6,900m2. Despite the disparity, both sides have welcomed the result, with Suriname's president saying he was “delighted” at the ruling.

The resumption of operations by CGX is a clear vote of confidence in the new situation and a sign that exploitation of the region's resources can proceed.

Sources: Upstream, BBC