Vice President Dr Bharrat Jagdeo
The Guyana Government could end its deal with Canadian-based company, CGX Energy after it failed to present satisfactory responses on plans to develop its oil Block offshore Guyana.
Vice President Dr Bharrat Jagdeo hinted at this possible outcome during a press conference on Thursday.
Asked for an update on the Government’s meeting with CXG, the Vice President indicated that Natural Resources Minister Vickram Bharrat was supposed to present his recommendation to Cabinet but at the time of the press conference, Jagdeo could not say whether this was done.
“[Vickram Bharrat] told me he did not get answers to the questions that we posed in a satisfactory manner, so, I suspect his recommendation to the Cabinet will be not to continue to engage with CGX,” the VP said.
Only last month, Jagdeo made it clear that the Government would not be played by CGX, which has submitted a Notice of Potential Commercial Interest in the Corentyne Block even as the company lags in completing its Berbice Deep-Water Port (BDWP) project.
CGX and its majority joint venture partner, Frontera Energy Corporation, announced last month that it has submitted a ‘Notice of Potential Commercial Interest’ for the Wei-1 discovery to the Guyana Government, which preserves their interests in the Petroleum Prospecting Licence for the Corentyne Block, offshore Guyana.
However, this was seen as a last-ditch move by the joint venture partners to avoid having to relinquish its acreage in the Block.
The Vice President had pointed out that if the joint venture partners want to pursue a development offshore in Guyana, then they need to detail that project and prove financing prospects.
“Let me make it clear, CGX will not play the Government of Guyana. For a very long time, they’ve been jerking people’s string – maybe their investors but no longer are we going to be tolerant of any ambiguity. If they are declaring commerciality now, they have to show in specific terms, how they intend to develop a project and where the finances are. I shouldn’t be so blunt but… we’ve given them time, as per the law, to do all they had to do. But this is the crunch time now,” the Vice President had stated.
In 2023, the joint venture partners successfully drilled the Wei-1 well, its second well in the Corentyne Block, as part of its appraisal programme for the Kawa-1 discovery, which ends today – June 28, 2024. That drilling exercise fulfilled the operators’ obligation under Phase Two of the Second Renewal Period of the original 10-year licence.
Based on reports, however, if that notice is approved by the Government, this will allow the joint venture partners to have an appraisal period to conduct an assessment of the commercial viability of the discovery. If it is determined that there is commercial viability then this would be declared to the Government and pave the way for the operators to apply for a production licence before the appraisal period ends.
In their missive, the joint venture partners said they have the support from investment banks and capital markets experts, Houlihan Lokey, to continue to actively pursue strategic options to unlock the potential of the Corentyne Block.
VP Jagdeo told reporters at Thursday’s press conference that the Notice of Potential Commercial Interest from the joint venture partners will be taken to Cabinet next week for review. He added that Government plans to engage the operators on the plans for their Guyana operations.
Already CGX has had to give up two other blocks offshore Guyana along with parts of the Corentyne Block after failing to develop them as per its agreement with the Guyana Government.
The Vice President’s harsh position with the Canada-based company comes on the heels of it delaying the completion of the Berbice Deep-Water Port (BDWP) project that is being built off the Berbice River in Region Six (East Berbice-Corentyne).
Previously, the Government had expressed concerns over the slow pace of the BWDP Project and made CGX relinquish the Demerara and Berbice exploration blocks offshore back to the State so that the company could focus on operations in the Corentyne Block, where it made significant oil discovery, as well as on the deep-water port facility.
Through its local subsidiary – the Grand Canal Industrial Estates (GCIE), CGX had undertaken the construction of the US$130 million deep-water port in the Berbice River which includes a wharf facility and a trestle as well as a cargo terminal. The port facility is being constructed to support oil and gas activities offshore of Guyana.
In an update back in March, the company had said that cargo operations at the port were slated to start in the second quarter of 2024. However, in its Quarterly Highlights for the first three months of 2024, which was published on May 8, CGX reported that operationalisation has been shifted to the third quarter of this year.
This is not the first time the highly-touted project has faced delays with CGX hoping to start operations in 2022. Over the past year and a half, the commencement timeline has been shifted on several occasions.
Being built on about 25 acres of land adjacent to Crab Island on the eastern bank of the Berbice River and some 4.8 km from the Atlantic Ocean, the BDWP facility is intended to serve as an offshore supply base for the oil and gas industry, and as a multi-purpose terminal to service agricultural import/export, containerised and specialised cargoes, including aggregates for construction purposes.
The BDW Project is also aimed at enabling the provisioning of oil operators and vendors in the territorial waters of both Guyana and Suriname.
GCIE had also previously reported that there were some minor setbacks with the project, due to revisions that were needed to the design of its wharf and trestle in the Berbice River.
