The Peter Zeihan Podcast Series - Will Venezuela Invade Guyana for Oil? || Peter Zeihan

Episode Date: April 4, 2024

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. Full Newsletter: https://mailchi.mp/zeihan/will-venezuela-invade-guyana-for-oil

Hey, everybody, Peter Zion 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 Guyana? For those of you unfamiliar with the back story, Venezuela until roughly 2000 was one of the world's major oil producers, kicking out somewhere between 2.5 and 4.5 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 backstory. Guyana is another former colony, more recent colony, just to the east of the country which has a population of like three,

not even three 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 there's some, supposed to add a million barrels per day this year. I'll have to get 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. jail patch. So the idea would be that Venezuela

to avoid a state collapse, which is at 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 and 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 and there was this 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 fast forward that over 20 years, you can have way too many generals in order to run the military and no functional military. So if the Venezuelan Army

was able to all 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 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, even 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, 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 gotta admit, it'd be hilarious to watch Venezuela try.