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Economy , Investing

Guyana Just Got Interesting

December 6, 2023
Guyana Just Got Interesting

Over the past several weeks, I’ve been planning a trip to Guyana with a group of fellow investors and explorers. I’m still pushing ahead with everything, but the conditions have changed, significantly…

To give you some background, I first wrote about Guyana in 2019. I explained how the English-speaking South American country was on the verge of experiencing a significant economic boom.

Since 2019, Guyana’s GDP has tripled, and as I recently wrote a couple months ago, there’s likely much more to come…

There are, of course, major opportunities in their growing oil industry. But, just like California’s gold rush in the 1800’s, those who did best in boom-towns typically invested in picks and shovels types of businesses.

And that is why I wanted to go to Guyana to check out the different opportunities on the ground. I’ve found that no matter what kind of information you get virtual access to, there is nothing better than on-the-ground exploring.

Time to Go Exploring

There is a type of feeling that you get when you visit different places. It’s the smells, the sights, and the ‘vibes’ that you can feel from those around you. Exploring opportunities from a firsthand perspective allows you to combine all of your senses, opinions, and information to form a gut feeling.

This gut feeling, or sixth sense, is something that has to be trained and developed over time. As time goes on, you get better and better at figuring out what you should and shouldn’t pursue.

Of course, there is much more than simply feeling the vibe on the ground. There are other clues to look at, such as other parties who are investigating the same thing you are.

Often times, when there are competitors in a market, that means it’s a great market. So, if you’re exploring a particularly interesting opportunity, and there are others doing the same, that might mean you’re onto something.

But sometimes those competitors are in another, dangerous, league…

Guyana Gets Pressured

If you’ve been following the news over the past week, you’d see that Venezuela has mobilized troops along their border with Guyana. As I write this, the situation is developing, so the next several of months could change drastically in either direction.

Without diving into too much history, it’s important to know that Venezuela has laid claim to over 60% of Guyana for over a century. This land border dispute, which is over a region called the “Esequiba.” has been drug through all kinds of international courts, with dozens of different countries chiming in.

Just yesterday, Maduro shared a new map of the country of Venezuela which includes the Esequiba region. He ordered this new map to be distributed throughout Venezuela’s society, announced Venezuelan citizenship to any Guyanese living in the Esequiba, and designated a Venezuelan general as the sole authority of the region.

Maduro tweet Guyana

Source: X

But why now? Why is Maduro pursuing an issue, which has been a stalemate for over a century?

Opportunity or Distraction?

Really, it all comes down to oil. I’ve previously explained in depth about the jockeying that has been going on in order for ExxonMobil to secure offshore drilling rights.

The US government has also established strong ties with Guyana, which has included visits from high ranking officials. I summarized the situation this past September: “In exchange for cheap and reliable oil, the US is going to help Guyana in every way imaginable. This includes everything from humanitarian and food aid, all the way to full on military defense.”

So, is Maduro challenging Guyana and the US by claiming the Esequiba?

Guyana map Venezuela

Source: WSJ

Here are three of the most likely scenarios that I see:

  1. Maduro is simply trying to strengthen his grip on Venezuela by claiming sovereignty over its oil-rich neighbor. Considering that Maduro faces an election next year (2024), this move is seen as a way to rally up patriotism and favorability for the leader who took over in 2013. Although I see this as the most obvious motivation for this move, the timing is suspect (or convenient) beyond the simple re-election situation.
  2. Maduro and his cabinet believe that the US is spread too thin round the world, entangled in multiple conflicts. If Maduro was ever to make a move on the Esequiba, now would be the time. It just helps that he’s up for re-election this year. Additionally, Maduro can use this situation as a way to further pressure the US to relax sanctions on Venezuela.
  3. Foreign powers are encouraging Maduro to invade Guyana. Although there is little to zero proof, I believe this is the most likely. Maduro is in a tough spot, as his country has been suffering for years. It’s very possible that a foreign power has agreed to support Maduro’s rule in exchange for putting pressure on Guyana. The US currently views Guyana’s oil supply as a strategic asset and would likely prioritize defense of this energy source over other global conflicts.

What’s Next for Guyana?

By the time you read this, I’m sure there will be even more changes and new information coming out. Just hours ago it was announced that Guyana has engaged the US for help with defense.

Whether this situation evolves into something bigger, or not, there will still be oil off the coast of Guyana.

And I’m still planning on visiting the country who could become the wealthiest (per capita) in the world. You in?