Guyana oil sector could benefit from reduced regional risk after US involvement in Venezuela

Guyana's oil sector could benefit from the US involvement in Venezuela, analysts say, as the move may help reduce regional risk. However, entering Guyana's market remains a significant challenge, especially for new participants.

The long-running territorial dispute between Venezuela and Guyana over the Essequibo region, which accounts for roughly two-thirds of the total Guyana territory, has become increasingly intertwined with offshore oil development, as Guyana's discoveries transformed the area into one of the world's most prolific new petroleum provinces.

Analysts told S&P Global Energy that any reduction in Venezuela's ability or incentive to escalate the dispute would materially lower political risk for Guyana's producers.

"The US involvement in Venezuela greatly reduces the territorial risk," said Andrés Armijos, head of Latin American analysis at energy consultancy Welligence. Those upstream operators already in the country are the main winners, as they can have the opportunity to speed up activity in the short term, he said.

In 2025, the Venezuelan government prepared to hold elections to select officials for the Essequibo region, but an International Court of Justice ruling ordered it to stop. Tensions between the neighboring countries escalated when a Venezuelan military vessel threatened oil vessels working in Guyana's Exclusive Economic Zone.

However, observers warn that the challenges facing Guyana remain.

The US intervention in Venezuela makes it less likely that there will be any changes in the status of Essequibo, but whether that will embolden Guyana operators to shot seismic and potentially drill wells to the West is too early to tell, said Bob Fryklund, chief strategist for upstream at S&P Global Energy.

The county has very strong ties to Asian countries like India and China, said Gerardo Penchyna, a political risk analyst at consultancy Arko International.

The Indian prime minister is very close to the Guyana government, and the country has received a lot of Chinese investment, Penchyna said.

"The alignment with the US is not guaranteed," he said, adding that although the risk of a Venezuelan invasion is "rhetorical," it might be enough to prevent operators from venturing West of their operations.

"To see exploration on the Venezuela side, we might have to wait for a more stable government," he said, noting that the idea of annexing Essequibo is prevalent even among members of the Venezuelan political opposition.