I’ve gotten a handful of questions regarding Venezuela invading the South American state of Guyana due to economic challenges and oil discoveries. The short answer is that I’m not worried about this, but here’s three reasons why.
This would be a difficult trek for the Venezuelans given the lack of infrastructure connecting the two countries. Venezuela also lacks a functional military that would be able to carry out this invasion. Lastly, the oil production in Guyana is predominantly offshore, so a land-based invasion is just impractical if the goal is to seize someone else’s oil projects. This one’s a nonstarter.
So, unless Venezuela magically fixes all of their military shortcomings, there’s no real concern of an invasion of Guyana. And that means the US can forget about this area and focus on the bigger fish for now.
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Hey everybody. Peter Zeihan here coming to you from Colorado, taking one from the Ask Peter List today. And is it do I worry about Venezuela invading the South American state of Guiana? For those of you unfamiliar with the backstory of Venezuela, until roughly 2000 was one of the world’s major oil producers kick it out somewhere between two and a half and four and a half million barrels a day based on the environment.
Since then, a guy by the name of Hugo Chavez, who is a populist who is completely incapable of doing math, took over and ran the place for about 15 years before he died. And his successor, who was a poor quality bus driver, took over. No joke. And they’ve run the place into the ground. So total production now is no more than a million barrels per day.
And even that’s a little touchy. And in fact, we’re probably going to see a new round of American sanctions go on it in a couple of weeks here, in which case even that low level is probably going to fall. And I can see a situation before the end of the decade where Venezuela actually becomes a net oil importer because of their inability to operate their own fields.
So that’s the back story. Guyana is a another former colony or recent colony just to the east of the country with has a population of like three, even 3 million, just three. Anyway, they found oil offshore a few years ago. And so the American company, Exxon has been operating there ever since. And I think they’re supposed to add a million barrels per day this year.
I’ll be back to you on that one. But it’s definitely over half a million barrels a day. It’s been the most promising new oil play in the world that is not in the U.S. shale patch. So the idea would be that Venezuela, to avoid a state collapse, which is a very real danger now, would pick up and move over to Guyana to take the oil and the income.
No is the short version. I don’t worry about this. Three reasons. Number one, there is no infrastructure linking the two countries. The corner of northeastern Venezuela that abuts Guyana is full on jungle and there’s not even a single road of note. So the Venezuelans would have to use their Navy or the Air Force, and they don’t have either of those things.
Which brings us to factor number two. They don’t really have an army either. When Chavez took over, the military was broadly opposed to him in the ongoing power struggle. And the way he solved that was by bribing the generals with the money that would have gone for equipment and training. Well, you asked for that over 20 years. You now have way too many generals in order to run the military and no functional military.
So if the Venezuelan army was able to go get into one place, they would just kind of walk as a mob into the jungle and die. And any that did manage to cross over into Guyana could easily be defeated by the Marines at the U.S. embassy, all six of them. There’s just there’s not a military question here. And then the third issue is that I don’t think it’s going to happen because all of the oil production is offshore and Venezuela is in its heyday, even when it was well run, didn’t operate a single offshore project.
So they would have to what, take over the country and rowboat out to the facilities, take them over, and then kindly ask Exxon to keep operating them, but to send all the income to Caracas. Yeah. No, not going to happen. So there’s no need for the U.S. to get involved here because there’s no danger whatsoever. Although I got to admit, it’d be hilarious to watch Venezuela try.
