Venezuela recently had a vote on whether to absorb two-thirds of current land of Guyana, its neighbour. Whether the vote was fixed or not, the result was 95% yes. Nicolas Maduro, Venezuela’s leader, might try to invade whilst the United States is distracted with the war In Israel and Ukraine. Maduro’s government-run oil company has seen its production fall drastically over the last two decades due to bad management and sanctions. Energy Information Administration: “Venezuela’s crude oil production has fallen from about 3.2 million b/d in 2000 to 735,000 b/d in September 2023.”
Guyana has recently discovered large oil deposits off its coast. S&P Global: “Production is expected to reach roughly 620,000 b/d once the Payara field reaches maximum capacity and exceed 1.2 million b/d by 2028.” Payara started production last month. Exxonmobil and its direct contractors have spent more than $1.2 billion with more than 1,500 Guyanese suppliers since operations began in 2015. ExxonMobil Guyana Limited operates the Stabroek Block (which includes Payara) and holds 45% interest. Hess Guyana Exploration Ltd. (recently bought by Chevron of $53b) holds 30% interest, and CNOOC Petroleum Guyana Limited (Chinese state-owned) holds 25% interest.
—————–
Iran-backed Houthi rebels in Yemen have attacked several ships in the Red Sea off its coast in response to the war in Israel. Shipping companies Maersk, Hapag-Lloyd and Mediterranean Shipping Company who make up good portion of international shipping container fleets have diverted all ships headed into the Red Sea on its way to the Suez Canal, and instead taking the long route around Africa passing by South Africa. This may affect shipping prices and shipping companies. The Baltic Dry Index, which measures the cost of shipping goods worldwide, is at its second-highest level in the last 5 years.
*****UPDATE JANUARY 30TH 2024*****
Shipping volumes have dropped to 30% of normal levels in the Red Sea. Egypt’s government earned $9bn in the year to June from tolls on the Suez Canal. Without those dollars, Egypt’s central bank could run out of foreign-exchange reserves and cause its government to default.
*I do not own any shares of any company mentioned in this article*
Devlin Demontigny 