In his strongest rebuke yet, Guyana’s Vice President, Bharrat Jagdeo has expressed strong distaste with CGX Energy’s handling of their contractual obligations for the Corentyne Block.
“Let me make it clear, CGX will not play the Government of Guyana” was the blunt message delivered by Jagdeo at his Thursday press conference.
This was in response to a question related to the company’s last-minute submission of a Notice of Potential Commercial Interest for the Wei-1 discovery to the government, which preserves its interest in the license area. CGX’s appraisal program for the Block is up on Friday.
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According to applicable law, an approved notice would allow the operator to conduct an appraisal period to assess the commercial viability of the discovery. If the operator determines the discovery is commercially viable, they can then declare this to the government. Subsequently, the operator must apply for a production license before the appraisal period concludes.
Jagdeo acknowledged the submission and said it would be reviewed and put to Cabinet in the new week. But in the same vein, Jagdeo made this clear: “For a very long time, they have been jerking people’s strings. Maybe their investors but no longer are we going to be tolerant of any ambiguity.”
The Vice President said that CGX must show “in specific terms” how they intend to develop the potential commercial Wei-1 project and show where the finances will emerge from.
“I should not be so blunt but I am blunt about this now. We have given them time to – as per the law, to do all they had to do but this is the crunch time now,” Jagdeo added.
Jagdeo had addressed the CGX issue before, for the Demerara Block, before the company relinquished it. Asked what direction it would take if the company could not meet its commitments, Jagdeo said it is “none of our business” if the company “can’t raise the money.”
CGX drilled the Wei-1 well in 2023 as part of its appraisal program for the Kawa-1 discovery. The appraisal area constitutes 994 square kilometers. CGX had to relinquish the rest of the Corentyne Block because the original 10-year Corentyne license ran its course.
The Kawa-1 appraisal program is due to end on Friday, June 28, 2024. The release by CGX did not indicate government approval of the new appraisal program, which is needed for them to keep the area expected to be delineated as the Wei-1 appraisal area.
CGX and Frontera have engaged investment bank Houlihan Lokey to explore strategic options for the Corentyne Block, including a potential farm down of their stakes to ease CGX’s financial difficulties. According to recent public statements, CGX’s stake in the Corentyne Block has decreased from 66.66% to 27.48% due to several funding deals. Frontera, initially a minority stakeholder, now holds 72.52% of the block. Additionally, Frontera has acquired 76.05% of CGX’s shares, giving it significant control over CGX’s corporate actions.
