U.S. and China Court Guyana... Which Path Will the Emerging Oil Power Choose?

Spotlight on Guyana's Oil Boom Since 2015
Over 40% Economic Growth Rate
Balancing Diplomacy Between U.S. Oil Development and Chinese Infrastructure Investments

AFP Yonhap News

Global attention is now focused on Guyana, a small country of 800,000 people, where President Mohamed Irfaan Ali has secured a second term. As Guyana rapidly transforms from one of South America's poorest nations to an emerging oil-rich country due to the accelerated development of its oil resources, economic and security tensions between the United States and China are expected to intensify. Additionally, a territorial dispute with neighboring Venezuela is raising the likelihood of U.S. intervention, making it a potential geopolitical variable in the future.

Spotlight on Guyana's Presidential Election... Fierce Competition Between U.S. Oil and Chinese Infrastructure Investments

On the 1st (local time), citizens in Georgetown, the capital of Guyana, are waiting in line at the presidential election polling station. Photo by Reuters Yonhap News

On September 4 (local time), the Guyana Elections Commission announced that the ruling People's Progressive Party won 55% of the vote in the general elections held on the 1st. As a result, President Irfaan Ali's re-election was confirmed. In Guyana, the leader of the party with the highest share of votes in the general election becomes president. Six candidates competed in this election, but even before the vote, President Irfaan Ali had enjoyed high approval ratings close to 60%, credited for driving economic growth since taking office in 2020.

According to the International Monetary Fund (IMF), Guyana's gross domestic product (GDP) reached $26 billion (about 36 trillion won) last year. This figure is nearly five times higher than the $5.4 billion recorded in 2020, just five years earlier. The country's economy has grown rapidly since U.S. oil company ExxonMobil discovered a large oil field off Guyana's coast in 2015 and oil production began in 2019. The economic growth rate, which was only 0.7% in 2015, soared to 43.6% last year, maintaining a high-growth trajectory.

Guyana currently produces approximately 900,000 barrels of oil per day, and by 2027, production is projected to increase to between 2 million and 3 million barrels per day, surpassing Iran's output and placing Guyana among the world's top 10 oil-producing countries. Oil exploration and production are being led by U.S. oil companies ExxonMobil and Chevron. Previously, the Guyanese government granted development rights to American oil companies on the condition that it receives 50% of oil sales revenue.

While the United States has taken the lead in oil development, China is investing around $1.4 billion (about 1.95 trillion won) annually in various infrastructure projects in Guyana, such as bridge and road construction. The expansion project for Guyana's largest airport, Cheddi Jagan International Airport, is being carried out by China Harbour Engineering, and the construction of a bridge over the Demerara River in the capital, Georgetown, is being led by China Railway Construction Corporation.

When Guyana was founded in 1966, the ruling People's Progressive Party advocated communism and maintained close ties with China, becoming the first Caribbean nation to establish diplomatic relations with China in 1972. However, since 2013, when the People's Progressive Party abandoned its communist stance and began to identify as a European-style socialist party, relations with China have cooled. The start of ExxonMobil-led oil development in 2015 marked the beginning of intensified competitive investment from both the United States and China.

Territorial Dispute with Venezuela Emerges as a Variable... Possibility of U.S. Intervention 

On March 27 (local time), U.S. Secretary of State Marco Rubio visited Guyana and held a press conference. Photo by Reuters Yonhap News

The territorial dispute with Venezuela, which is expected to intensify following the presidential election, is also drawing international attention to Guyana. The Venezuelan government claims sovereignty over the Essequibo region, a key oil-producing and border area of Guyana, and in May, it went so far as to hold local elections there and appoint a governor, asserting the area as Venezuelan territory.

There is also the possibility of U.S. government intervention in the border dispute. According to AFP, on March 27, U.S. Secretary of State Marco Rubio visited Guyana and issued a strong warning at a press conference, stating, "If Venezuela launches an attack against Guyana or ExxonMobil, it will be a very bad day for them."

Nevertheless, Venezuela continues its border dispute despite U.S. pressure. At the end of last month, Venezuelan forces fired on a vessel transporting election materials for Guyana. The Guyanese government expressed regret in a statement, saying, "The shots were fired from Venezuelan territory."

After the incident, the U.S. government deployed seven warships, one submarine, and about 4,400 troops to Venezuelan waters, citing the need to crack down on Venezuelan drug organizations. U.S. forces, stationed in Venezuelan waters, attacked a boat carrying local drug traffickers on the 2nd, killing 11 people. The Guyanese government has welcomed the U.S. military's intervention. In a press conference on the 2nd, President Ali stated that Guyana would "support the United States in any way necessary to eliminate all threats Venezuela poses to our security," in response to questions about the deployment of U.S. warships in the Caribbean Sea near the Venezuelan coast.

Experts note that while Guyana is cooperating with the United States to counter Venezuela's threats, it will ultimately seek to maintain a balance in its relations with both countries. Ryan Berg, director of the Americas Program at the Center for Strategic and International Studies (CSIS), told CNN, "Guyana is likely to remain at the center of resource competition between the United States and China for some time, as it is capable of producing oil that is far more profitable than that of existing oil-producing countries. Currently, Guyana cannot choose to trade exclusively with either the United States or China, and even if it maintains a pro-U.S. stance, it will inevitably have to prioritize relations with both countries depending on the project."