“There is no issue to discuss” – VP Jagdeo on expired Corentyne Block licence

Insisting that the Petroleum Agreement for the Corentyne Block offshore Guyana is still in place, the Canada-based Joint Venture of CGX Energy Inc and Frontera Energy Guyana Corp is pushing for an amicable resolution, but the Guyana Government believes there is nothing to discuss since the licence has already expired.

The Government had previously reported that the Joint Venture partners had failed to demonstrate the financial capacity needed to advance towards production and commercial development stages – a crucial requirement for the renewal of their exploration licence. As a result, it said the Petroleum Prospecting Licence for the Corentyne Block has expired and the acreage is now back with the State.

This was reaffirmed by Vice President Bharrat Jagdeo at a press conference on Thursday.

“We have made it clear, the term for the licence expired. Therefore, if the term of the licence [is expired] and when they’re required to take some actions under the licence that they failed to comply with, then there is no issue to discuss. The licence’s term expired… If they have a different interpretation then they can go through the legal process,” Jagdeo contended.

His statements came on the heels of the JV partners stating in a press statement on Thursday that they have not received any formal communications from the Government of Guyana regarding the status of the licence. In fact, the statement pointed out that they remain committed to the potential development of the Corentyne Block, where oil has been discovered at the Kawa-1 and Wei-1 wells.

“The JV is firmly of the view that the Corentyne Block Petroleum Agreement remains in place. The JV recognises that recent comments from certain Government officials have created confusion amongst stakeholders, which have materially affected the JV and caused substantial harm to the JV’s efforts to develop the Corentyne Block,” the missive stated.Further, it related that CGX and Frontera are exploring ways to amicably resolve this matter through negotiations.

“The JV is reviewing all alternatives to safeguard its interest in the Corentyne block and Guyana and has sent the Government of Guyana a letter activating a 60-day period for the parties to the Corentyne Block Petroleum Agreement to make all reasonable efforts to amicably resolve all disputes via negotiation, as provided for in the Corentyne Block Petroleum Agreement.”

However, while the Vice President said he has not seen the letter from the JV partners, he noted that the Guyana Government is ready to go to arbitration court to settle the matter.“You can’t negotiate on something that you actually don’t have any longer. As far as we’re concerned, and the legal advice is that the licence lapsed because of the conditions under the licence and the timeline for the licence itself… We’re not worried about it going to court… We believe we have a strong case,” Jagdeo asserted.

In 2021-2022, CGX Energy Inc, a Canada-based oil and gas company, had said it had successfully drilled the Kawa-1 well in the eastern channel sand complex of the northern segment of the Corentyne Block. However, the company has since not progressed towards fully developing the potential of the Block.

Then in 2023, the joint venture partners successfully drilled the Wei-1 well, the second well in the Corentyne Block, as part of their appraisal programme for the Kawa-1 discovery, which ended on June 28, 2024. That drilling exercise fulfilled the operators’ obligation under Phase Two of the Second Renewal Period of the original 10-year licence.

Back in June, CGX and Frontera announced that they had 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.

However, that move was seen as a last-ditch effort by the joint venture partners to avoid having to relinquish their acreage in the Block, so the Guyana Government withheld approval.

Based on reports, if the Notice of Potential Commercial Interest had been approved by the Government, it would have allowed 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, 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.Previously, VP Jagdeo had stated Government would not allow CGX to play with Guyana and if the joint venture partners wanted to pursue a development offshore, then they needed to detail that project and prove financing prospects.

It was subsequently reported that CGX and Frontera had approached US-based investment bank Houlihan Lokey, as they explore strategic options to develop the Corentyne Block. In an August 7 press release on its Financial Statements for the second quarter of 2024, CGX said the JV partners have been working with the Guyana Government on moving forward.

“[We] have engaged in regular, constructive and collaborative conversations [with the Guyana Government] throughout the Joint Venture’s tenure on the Corentyne block, including discussions regarding conditions and timing under which further activities could be performed by the Joint Venture in the Corentyne Block. The Joint Venture, with support from investment bank and capital markets experts Houlihan Lokey, continues to actively pursue strategic options to unlock the potential of the Corentyne Block,” CGX had stated.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.