Over the years, Venezuela's claim to the Essequibo region of Guyana has been a much more bitter issue than the maritime dispute with Colombia. Historical and cultural dissimilarities between Venezuela and Guyana explained this to some extent. Formerly British Guiana, Guyana represented for Venezuela the unfair intrusion of an extrahemispheric colonial power into the Caribbean region. Originally settled by the Dutch, the Essequibo region was claimed by the Spanish, seized by the British, and subsequently restored to the Netherlands by France. Britain finally took firm possession in 1803 during the Napoleonic Wars. After achieving independence from Spain, the Republic of Gran Colombia, and later Venezuela, petitioned Britain for a resolution of the border question. The Venezuelans held that the Essequibo River should mark their eastern boundary the British favored the mouth of the Orinoco in the Quiana highlands at the Brazilian border as the demarcation point. Negotiations failed to achieve a compromise. A protracted period of proposals, threats, and brief skirmishes, yielded in 1897 to international arbitration, a step strongly urged on the British by the United States.

The final decision of the arbitral tribunal awarded Punta Barima and the mouth of the Orinoco to Venezuela, but granted the vast majority of the Essequibo territory to Britain. The Venezuelan representatives, claiming that Britain had unduly influenced the decision of the Russian member of the tribunal, protested the outcome. As a poor country with comparatively limited military capabilities, Venezuela could not press its claim against the British empire by force of arms. Periodic protests, therefore, were confined to the domestic political arena and international diplomatic forums.

In 1962 Caracas began to make more forceful efforts to resolve the Essequibo dispute. Britain agreed in November to hold tripartite negotiations, including representatives of British Guiana, which would review the record of the 1899 arbitration. After numerous ministerial conferences, the parties agreed to procedures by which the conflicting claims could be resolved definitively. Subsequent negotiations were complicated by Venezuela's occupation in 1966 of a portion of Ankoko Island in the Cuyuni River that had previously been claimed by Guyana (which became independent that same year). In 1968 Venezuela also claimed a portion of the Caribbean Sea near the mouth of the Essequibo River that had been recognized as Guyanese waters. The Guyana government also accused Caracas of aiding an insurrection in southern Guyana the following year. This incident prompted reports of a Venezuelan military buildup near the Guyanese border. Against this backdrop of conflict and recriminations, the tripartite commission that had been negotiating the territorial dispute declared itself incapable of producing a settlement. The two governments began bilateral talks in 1970.

In 1970 leaders of both countries signed the Protocol of Port-of-Spain after talks hosted by the government of Trinidad and Tobago. Under the terms of the protocol, Caracas agreeac7 eed to suspend its territorial claims for twelve years. The two nations established diplomatic relations and continued their talks. In 1981, however, Venezuelan president Herrera reasserted the historical claim to the Essequibo and refused to renew the protocol. Venezuelan political and military leaders began to make bellicose statements with regard to the Essequibo there was much speculation in the press that Venezuela might take the region by force. This saber rattling aroused the concern of the Brazilians, who also considered Guyana within their sphere of influence. In September 1982, Guyanese president Forbes Burnham visited Brasilia and agreed to a project whereby the Brazilian government would build a road northward through the Essequibo region. If the Venezuelans had entertained notions of reclaiming the territory by force, this demonstration of concern by their giant neighbor to the south apparently deterred them from taking action. Accordingly, both governments submitted the dispute to the UN Secretary General under the terms of the 1966 tripartite agreement signed in Geneva. The issue lay dormant through the 1990.

Although the Venezuelan claim to the Essequibo stemmed in large part from nationalistic and anticolonialist sentiments, it also involved the control and exploitation of natural resources. Long unexplored, the Essequibo reportedly contains important mineral and petroleum deposits. Its crude oil reserves, according to some sources, are of a lighter grade than most of those produced in Venezuela. Lighter oils are more easily extracted and refined, and they command a higher price on the world market. It was highly unlikely, however, that Venezuela would annex the Essequibo by force, risking regional conflict and international condemnation, merely to add to its already considerable petroleum and mineral reserves.

Data as of December 1990