Corentyne oil block: “CGX will not play the Government of Guyana” – VP Jagdeo

…says company will have to show project details, financing source to move forward

Vice President Bharrat Jagdeo has made it clear that the Guyana Government would not be played by Canada-based CGX Energy, 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.
On Wednesday, CGX and its majority joint venture partner, Frontera Energy Corporation, announced 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 is seen as a last-ditch move by the joint venture partners to avoid having to relinquish its acreage in the Block and according to VP Jagdeo, Government will not tolerate this. He pointed out that if the joint venture partners want to pursue a development offshore 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 declared at a press conference on Thursday.
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 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 future 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.

BDWP Project
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).
“They made a commitment several years ago – maybe two or three years ago – that they will complete this project. They’ve been unable to complete it as yet. So, in light of the fact that they’ve now [declared potential commercial interest in the Corentyne Block]… we have to see whether they are prepared to move to a project. If they’re moving to a project then they would still need that [port] facility. If there is no project, we’ll have to engage them on what happens there. So, we’re going to be inviting them in for a meeting,” the vice president posited.
Previously, the Guyana 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 since 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.
As the lowest bidder, GAICO Construction and General Services Inc. was selected to construct the 160-foot access trestle and wharf and to perform the required dredging operations for the BDWP facility to the tune of US$2.1 million.
The company is currently constructing a security fence around the port yard. Work was slated to commence in May on the construction of a trestle extension and ramp as well as driving piles for fendering and mooring to aid in bringing vessels alongside. (G8)