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Essequibo conflict means higher insurance costs for Guyana

Wednesday, December 20th 2023 - 09:55 UTC
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Oil drilling will entail higher premiums, it was explained Oil drilling will entail higher premiums, it was explained

Amid escalating concerns about the Essequibo crisis with neighboring Venezuela, Guyana has been included in the list of greatest risk for maritime transport drafted by insurers Lloyd's Market Association for vessels visiting offshore facilities in the former British colony's Exclusive Economic Zone, beyond “territorial waters.”

The Lloyd's Market Association Joint War Committee warned that the move is likely to increase the cost of shipping crude oil from facilities run by ExxonMobil. “Any additional shipping costs are likely to be small at first. While listing an area means war risk premiums may be charged, they generally only increase when conflict breaks out,” it was explained through a statement.

The new assessment comes after Venezuelan President Nicolás Maduro insisted Monday he would “fully recover” the Essequibo, a 160,000 square-kilometer oil-rich territory. Venezuela also announced Monday it was activating business units for Essequibo, under full Guyanese control since its independence.

Large reserves of oil and natural gas in Essequibo were discovered in 2015 by ExxonMobil and are said to amount to around 11 billion barrels of oil, which led Guyana to the highest economic growth in the world (57.8% in 2022).

Guyana President Irfaan Ali has promised to continue oil production, guaranteeing the protection of all operators making investments in the Essequibo region. He also met with British Minister for the Americas, Caribbean, and Overseas Territories David Rutley, who ratified the United Kingdom's support in the controversy.

After that, Maduro demanded that the United Kingdom authorities “take their hands off” Latin America and claimed that some countries continued to believe they owned their past colonies.

The conflict grew on Dec. 3 when the people of Venezuela voted in a referendum to annex the disputed area, which was followed by an “action plan” consisting of the settlement of a military division near the area and the appointment of a military governor until elections can be held.

Maduro and Ali agreed last Thursday in Saint Vincent and the Grenadines not to threaten or use force and to refrain “whether in word or deed, from escalating any conflict or disagreement arising from any controversy.”

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