Page 5 - LatAmOil Week 24 2022

LatAmOil COMMENTARY LatAmOil

CGX and Frontera had hoped to begin drilling of its licence for Demerara. CGX also said in a
less than a year after securing that extension. separate statement that its majority-owned sub-
They identified Makarapan-1 as their first explo- sidiary ON Energy had struck an agreement in
ration target at Demerara and said they intended principle on relinquishment of Berbice, a shal-
to spud the well in February 2021. However, they low-water block where exploration plans have
later negotiated a one-year extension for that also failed to gain momentum. It explained that
drilling programme, saying they expected to ON Energy and the government were looking
start work on Makarapan-1 in February 2022. to sign “a mutual termination agreement, which
At the time, the Canadian companies proba- also remains to be defined and documented, so
bly did expect to return to Demerara. As it hap- that the Berbice block can be relinquished in a
pened, though, their attention was drawn to the timely manner, similar to the Demerara block.”
Corentyne block, where they spudded their first Both CGX and Frontera expressed some
exploration well, Kawa-1, in August 2021. That satisfaction with the outcome of this process,
well turned out to contain light crude oil and gas saying that relinquishment would allow them to
condensate, and it served as a strong indicator focus on Corentyne. As Orlando Cabrales, the
that the northern end of the block was likely to CEO of Frontera, explained: “The results from
hold additional quantities of hydrocarbons. the Kawa-1 well have been a significant factor Relinquishment
CGX and Frontera therefore announced in in developing a defined opportunity set for the
the first quarter of 2022 that they intended to joint venture partners. It was important to us, as will allow CGX
delay work at Demerara in order to focus exclu- partners to the government of Guyana, to pos-
sively on Corentyne’s potential. The partners are itively resolve our desire to focus on Corentyne and Frontera to
on track to spud a second exploration well there and not allow the Demerara block to be delayed
at the Wei-1 site, located about 14 km north- in terms of assessing its potential. As a result, we focus exclusively
west of Kawa-1, later this year and will also con- have, in principle, a mutual agreement to relin- on Corentyne
tinue examining the seafloor in the northern quish the Demerara block and allow for inter-
portion of the block. ested parties to make advances in that area.”
This plan has drawn a sharply negative Suresh Narine, the executive co-chairman
response from Guyana’s government. Officials of CGX’s board of directors, spoke similarly.
in Georgetown said several times that they “We have a significant opportunity on the Cor-
expected CGX and Frontera to drill at Deme- entyne block following the discovery at Kawa-
rara as per their commitments, even if Coren- 1,” he said. “The joint venture is moving ahead
tyne had more obvious potential. rapidly to advance our programme and unlock
Vice President Bharrat Jagdeo went further, the potential of the Corentyne block, for the
saying earlier this month that the government benefit of all stakeholders. To do so required a
would revoke the licence for the Demerara off- collaborative effort to resolve outstanding com-
shore block if the joint venture failed to cover its mitments for the Demerara and Berbice blocks,
exploration drilling obligations. CGX and Fron- and we are appreciative of this agreement.”
tera have already secured one licence extension Technically speaking, the relinquishment
and Georgetown is not likely to grant another, process has not fully come to a close, as the par-
he remarked. ties have not finalised a termination agreement.
In all likelihood, though, they will do so in the
Concentrating on Corentyne near future without significant delay or dispute.
The Canadian companies did not respond pub- It then remains to be seen whether Guyanese
licly to Jagdeo’s remarks, but they did act fairly authorities include either Demerara or Berbice
quickly to settle the matter. in an upcoming tender of unassigned offshore
On June 16, they announced in a statement acreage, should they decide to go ahead with
that they had reached an agreement with the such a bidding contest as discussed in the third
Guyanese government on the relinquishment quarter of the year. ™

Image from CGX/Frontera technical webinar in May 2022 (Screenshot from CGX

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