Page 5 - LatAmOil Week 24 2022
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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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