Page 4 - LatAmOil Week 24 2022

LatAmOil COMMENTARY LatAmOil

(Image from 2020 CGX Energy presentation)
CGX, Frontera exit Demerara

As the Canadian partners seize an opportunity to focus on the oil- and condensate-bearing

Corentyne block, they offer up a practical example of how Guyana’s relinquishment policy works

ONE of the provisions that Guyana’s gov- determines that the operator is not complying
ernment typically includes in oil explora- with the terms of its licence.
WHAT: tion and development contracts concerns Guyana’s oil sector is new enough that the
CGX and Frontera have relinquishment. state has not had to make a vast number of
agreed to relinquish their Under these provisions, Georgetown decisions about second-round renewals or
holdings in Demerara. requires the operators of upstream projects to non-fulfilment of contractual obligations yet.
let a portion of their equity stakes in previously Nevertheless, it has had to address the matter
WHY: assigned blocks revert to the government when several times since international oil compa-
Guyana’s government has their licences come to an end. That typically hap- nies (IOCs) began seeking access to the coun-
been insisting that the pens four years after the site is initially awarded, try’s offshore zone, and this week, it brought a
companies uphold their and the state has the option at that point either relinquishment-related question to a successful
pledges to drill explora- to renew the operator’s existing licence for near-conclusion.
tion wells at the offshore another three years or take a portion of the stake
block.
and offer it to another investor. If the govern- Contractual commitments
WHAT NEXT: ment opts to renew, it will then face the choice The matter at hand was fairly straightforward.
The parties are on track of whether to select renewal or relinquishment It concerned the question of whether CGX
to finalise a mutual three years later, at which point relinquishment Energy, a Canadian company, could be expected
termination agreement is the more likely option. to uphold its commitment to drilling at least two
soon. Throughout this process, Georgetown exploration wells at the offshore Demerara block
is more likely to opt for relinquishment if it before February 2023.

P4 www. NEWSBASE .com Week 24 16•June•2022