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ONE TO WATCH THIS WEEKEND: Venezuela’s government is pressing ahead with a planned referendum Sunday on the future of Guyana’s Essequibo region, escalating tensions to historic highs in a dispute over an oil- and mineral-rich territory that Caracas views as an extension of its country, but which Guyana argues would amount to annexation.
The primary driver behind the upcoming referendum is energy resources: The more than 61,000-square-mile region comprises two-thirds of Guyana’s landmass, as decided by international arbiters in 1899, and is home to massive offshore oil reserves discovered by ExxonMobil beginning in 2015.
Since then, some 46 offshore discoveries have been made, accounting for more than 11 billion barrels of recoverable oil resources. Just last month, leaders announced another “significant discovery” at the Stabroek offshore site, believed to be able to generate up to 1.2 million barrels of oil and gas per day by 2027, according to Reuters.
Venezuela revived its claims of sovereignty in the eight years following Exxon’s first oil discovery. Earlier this fall, Venezuela criticized an offshore oil auction held by Guyana, arguing that it has no claim to the territory, and that the action is a violation of international law.
What’s next: Tensions are expected to rise further tomorrow, when the International Court of Justice said it will hand down its response to Guyana’s emergency request to prevent the referendum.
Regardless of the court’s decision, Venezuelan President Nicolas Maduro plans to plow forward. He has repeatedly stated he will not accept interference from “third parties,” including international bodies like the ICJ, and that he plans to proceed with the Dec. 3 vote despite the outcome of Friday’s ruling.
The referendum itself even serves as an attempted check on the ICJ, asking voters to approve of Venezuela’s “historical position of not recognizing the jurisdiction of the International Court of Justice” to settle the land controversy.
Meanwhile, Venezuelan General Domingo Hernández Lárez said yesterday that Caracas is readying to deploy 356,513 military personnel for security purposes ahead of Sunday’s vote, and roughly 120,000 police to be stationed across the country.
What’s at stake: Failure to adhere to the ICJ’s decision could make things politically difficult for Venezuela. In October, the U.S. agreed to temporarily ease sanctions on its oil and gas sector for the first time since 2019. But the six-month sanctions relief is contingent upon Venezuela holding “free and fair” elections in 2024, and U.S. officials have warned they could be reinstated.
Venezuela has raced to ramp up its oil exports in the meantime, and is now producing 850,000 barrels of oil per day, the country’s oil minister said last week—roughly double the amount it was producing at the same time two years prior, when the U.S. sanctions were in full force.
Speculation of war: The military personnel and significant police presence expected in Venezuela Sunday has put Guyana, and other countries in Latin America, on edge. Venezuelans will vote on five provisions, including whether they “agree to reject by all means, in accordance with the law,” the 1899 border that separates it from the Essequibo territory—prompting questions and fears as to what might come next.
Brazil said yesterday that it has “intensified defensive actions” along its northern border as it monitors the dispute, and has started directing military resources north ahead of a feared spat.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
EPA PROPOSES RULE TO TIGHTEN LEAD PIPELINE STANDARDS: The EPA proposed a new rule today aimed at strengthening its existing lead and copper pipe standards, as part of the administration’s goal of lowering unsafe pollution levels and protecting vulnerable people from exposure to harmful drinking water.
The proposed rule would accelerate the Biden administration’s goal of achieving 100% lead pipe replacement within the next 10 years, officials said yesterday. It is meant to improve tap water sampling, lowering the so-called lead action level from 15 micrograms per liter to 10 micrograms per liter, and to strengthen efforts to locate and replace legacy lead pipes, among other things.
It would also improve communication between water systems and local communities to help communicate any risks of lead exposure and the actions being taken to help reduce community exposure, administration officials said.
Lead pipe exposure remains a pervasive problem for millions of people. Despite being banned from new construction in the 1980s, over 9 million lead service lines in the country are still delivering water to communities nationwide.
“The bottom line is lead poisoning is preventable,” White House Council on Environmental Quality Chairwoman Brenda Mallory told reporters on a call yesterday. “This is a problem we can and will solve to save more children and families from facing it.” Read more from Breanne here.
LOSS AND DAMAGE FUND DEAL AGREED TO AT COP: Delegates from nearly 200 nations have pledged to create a fund to help vulnerable countries deal with the effects of climate change, with richer nations promising at least $260 million to begin the program, marking a significant milestone on the first day of global climate negotiations in Dubai.
During the largest climate conference, otherwise known as COP28, delegates adopted a framework for the World Bank-hosted fund after months of disagreement and negotiations. United States climate envoy John Kerry said the Biden administration would work with Congress to provide $17.5 million.
The United Arab Emirates — the nation hosting the conference this year — said it would add $100 million to the fund, alongside Germany’s contribution of the same amount. The United Kingdom promised £60 million ($76 million), and Japan added $10 million. These contributions would clear the $200 million minimum threshold needed to launch operations, setting the foundation to begin disbursing money early next year.
The details had been agreed to earlier this month at a pre-conference session, where several countries objected to the World Bank hosting the fund because of its strong U.S. ties. All parties, however, agreed that the World Bank’s oversight of the money would be temporary. Read more from Nancy here.
TOP DEVELOPMENT BANKS LAUNCH DEBT-FOR-NATURE SWAP TASK FORCE: The world’s largest multilateral development banks are set to launch a global “task force” at the climate summit in the coming days to increase and beef up the size of ‘debt-for-nature’ swaps that countries can do, sources tell Reuters.
Debt-for-nature swaps – which is where a developing country’s debt is decreased in return for protecting vital ecosystems – are of growing interest following a number of successful examples in regions like Belize and the Galapagos Islands.
The creation of the task force is the most significant move that underlines the growing support of these deals from multilateral lenders, which have trillions of dollars worth of firepower. MDBs play an important role in debt-for-nature swaps because they provide the credit guarantees and/or political risk insurance that make them viable.
The plans are expected to be announced at the summit’s “finance day” on Monday, and sources say the group will be formally called the “Task Force on Sustainability-linked Sovereign Financing for Nature and Climate.” It will be initially chaired by the Inter-American Development Bank and the U.S. government’s Development Finance Institution. The World Bank, European Investment Bank, African Development Bank, Asian Development Bank, the Asian Infrastructure Development Bank and a number of others are some of the institutions that are expected to join. More on that here.
SUPREME COURT ORAL ARGUMENTS IN SEC V. JARKESY: The Supreme Court on Wednesday appeared to be leaning toward curbing the power of federal agencies to enforce their own rules through in-house adjudication, E&E News reports.
During an oral argument, the conservative-leaning court questioned why Securities and Exchange Commission administrative law judges – rather than a federal judge and jury – should handle an enforcement case against George Jarkesy, a hedge fund manager who faces hundreds of thousands of dollars in fines based on accusations of lying in audits and misrepresented investments.
It all depends on the scope of the ruling within SEC v. Jarkesy – but the justices could wrest enforcement power away from agencies like the Federal Energy Regulatory Commission, the Interior Department, and the EPA.
A decision like that would continue a recent trend by the Supreme Court of diluting the strength of executive agencies – which Chief Justice John Roberts said Wednesday have assumed more power over the public in recent decades.
“Should that be a concern for us or a consideration?” Roberts asked Justice Department attorney Brian Fletcher representing the SEC.
The significance: The court case has captured the attention of the energy industry, with some arguing that a win for Jarkesy could help energy companies facing enforcement proceedings before FERC. Energy Transfer, the developer behind the Rover gas pipeline, has stated that it was hard for companies to get fair treatment before FERC, and instead contend that enforcement cases should be handled before the courts. The Rover project faces millions of dollars in fines for allegedly lying about the removal of a historic farmhouse and spilling diesel-tainted drilling fluid into an Ohio waterway. Read more on that here.
OPEC+ TO DEEPEN SUPPLY CUTS: OPEC+ agreed to deepen their oil cuts by 1 million barrels per day today, matching Saudi Arabia’s production cut of the same size as they look to prevent a feared supply surplus in 2024.
Riyadh agreed to extend its voluntary supply cut of 1 million bpd, which it first announced in July, sources told Bloomberg. The news comes as OPEC members look to use their collective producers’ power to keep prices between $80 and $100 per barrel.
“If those numbers get confirmed it shows OPEC+ wants to keep their hands on the oil wheel,” UBS Group analyst Giovanni Staunovo told the outlet. The oil cartel, he added, is “continuing to apply a proactive stance considering likely seasonally weaker demand at the start of 2024.”
Oil prices edged higher on the news, with futures for international benchmark Brent crude rising past $84 per barrel as of mid-morning, a 1.4% jump, while futures for U.S-based West Texas Intermediate saw a 56-cent rise from the previous day of trading, rising to at least $78.42 per barrel.
…MEANWHILE, THE GROUP ADDS BRAZIL AS NEWEST MEMBER: OPEC+ confirmed today that it has accepted Brazil into its influential group of oil producers. Brazilian Energy Minister Alexandre Silveira said today that their membership had been approved by OPEC President Lula da Silva, and will begin next year.
It remains unclear whether Brazil would need to comply with the expected supply cuts agreed to today, as it will not join the cartel until January. Read more from CNBC here.
The Rundown
E&E News Here comes the Cybertruck, loaded with controversy
Reuters In China’s coal country, full steam ahead with new power plants despite climate pledges
