Canadian Oil Exploration Company CGX Energy Inc is seeking new business partners to develop the highly anticipated deepwater port to serve the developing oil and gas industry after an agreement with its previous partner did not materialise.
CGX explained in a statement that its potential partner pulled out from the project for a number of reasons, including its inability to demonstrate financial capacity to for the undertaking.
Award-winning global oil and gas newspaper ‘Upstream’ reported on October 19 that the potential partner “lost confidence” in “certain counter parties” that had signed a term sheet to build the wharf and logistics yard.
The term sheet was signed in April as US oil giant ExxonMobil was appraising what would become the world-class Liza discovery, which introduced a wave of industry optimism for Guyana’s deepwater offshore province.
Upstream reported that the exclusivity period in the term sheet lapsed and after an extension also lapsed, CGX decided to pull the plug on the deal, partially because it was unable to determine the financial wherewithal of the funding parties to complete the transaction proposed by the term sheet.
CGX Co-chairman Serafino Iacono said in a statement that, “we abandoned the proposed transaction for a number of reasons, including as a result of the partner not being able to demonstrate the financial wherewithal to complete the purchase of the assets and fund the requisite capital expenditures required under our proposed partnership.”
He explained that the company could not take the risk of entering a definitive deal with a partner that could not demonstrate a baseline ability to meet the financial commitments under the proposed terms of the transaction.
As a result, CGX is now actively seeking a new partner for the development of the deepwater harbour.
The Company said it already has interest from several parties and hopes to enter an agreement before the end of 2016.
CGX holds three licenses in the Guyana-Suriname Basin, a frontier Basin in South America with a proven hydrocarbon system and highly prospective deepwater plays that can be drilled in shallow water.
In 2000, the United States Geological Survey (USGS) identified the Guyana-Suriname Basin as having the second highest resource potential among unexplored oil basins in the world.
In 2010, CGX secured a 50-year land lease from the Government of Guyana for a 22 hectare plot with 600 meters of frontage property at the mouth of the Berbice River.
CGX’s objective is to build a deep-sea port to service both the highly active offshore oil and gas exploration industry in the Guyana-Suriname Basin as well as regional sugarcane and rice producers.
Earlier this year, President David Granger had promised that the deepwater harbour being established in Guyana is still on the cards and could become a reality as soon as funding is available and logistics worked out.
CGX Energy Inc Co-chairman, Professor Suresh Narine had explained that a deepwater harbour in Guyana can actually take the strain off oil exploration companies which depend on the Port of Chaguaramas, located some 450 miles from Guyana, as the primary source of raw materials for their operations.
If this economic activity is transferred to a closer port – in Berbice – it can significantly cut the expense endured by these oil giants.
Also, with the availability of a cheaper option, it may likely attract more exploration companies to search for oil in Guyana’s waters, which can further contribute to the economic development of the country.
