Guyana has issued a 30-day notice of cancellation to the CGX Energy and Frontera Energy joint venture’s licence to explore the offshore Corentyne block. The company has until the 22nd of this month to defend why it should not be evicted.
Minister of Natural Resources Vickram Bharat yesterday told Stabroek News that the government will address the issue today through Vice President Bharrat Jagdeo at his press conference.
Frontera Energy on Tuesday issued a press release which said, “The government has taken the position that the licence, together with the Joint Venture’s Petroleum Agreement with the government (as amended, the ‘Petroleum Agreement’), have terminated and that, in the opinion of the government, there are no reasonable grounds to grant any extensions to the Joint Venture in respect of its appraisal or exploration obligations under the licence or the Petroleum Agreement. Furthermore, the government says that if it is determined that the licence has continued, or that the Joint Venture holds any other type of licence contemplated by applicable legislation, the letter serves as a 30-day notice of the government’s intention to cancel such licence.
“Although the government argues that the licence has terminated, it invites the Joint Venture ‘on or before February 22nd, 2025 (…) to submit any representations [the Joint Venture] wish[es] [the government] to consider prior to [the government] making [its] final decision as to whether to not cancel any licence that may exist. Any such licence will cease to have effect on March 10, 2025, unless any representation that may be made [is] favourably considered.”
The government also states its willingness “to extend the time for good faith negotiations to the dates set forth above so as to allow receipt and consideration of any representation” the Joint Venture makes. The letter stated that such invitation and intention to cancel are in no way any admission that the Joint Venture currently holds a licence of any nature.
“The Joint Venture remains firmly of the view that its interests in, and the licence for, the Corentyne block remain in place and in good standing and the Petroleum Agreement has not been terminated,” the release added.
However, the companies said that they are seeking legal advice on the matter.
“The Joint Venture looks forward to expeditiously resolving this matter and continuing its multi-year efforts and investments to realize value for the people of Guyana and its shareholders from the Coren-tyne block,” it added.
In December last year and following the expiration of the exploration licence of the joint venture, the government announced that it had ruled out going back to the table for renegotiations and if the company wasn’t satisfied with that stance they could go to court.
“We have made it clear, the term under which the licence [was issued, has] expired. And therefore… when they are required to do or take some actions under the licence and they fail to comply, then there is no issue to discuss. The licence expired. If they have a different interpretation, they can go through the legal process,” the Vice President had stated.
“You can’t negotiate on something that you actually don’t have. As far as we are concerned and the legal advice is, their licence lapsed because of the conditions under the licence and the timeline for the licence itself. That is our position at this moment,” he added.
The Vice President’s posture came following a release from the company that said statements from the government had caused the company substantial harm.
It stated that CGX and its joint venture (JV) partner Frontera remain committed to the potential development of the Coren-tyne block as supported by the JV’s recent discoveries at Kawa-1 and Wei-1.
“The JV has engaged in ongoing constructive communications with the Government of Guyana regarding the Corentyne block with the latest one occurring on September 25, 2024. To date, the JV has not received any formal communications from the Government of Guyana regarding the status of the licence. The JV is firmly of the view that the Coren-tyne block Petroleum Agreement remains in place. The JV recognizes that recent comments from certain government officials have created confusion amongst stakeholders, which have materially affected the JV and caused substantial harm to the JV’s efforts to develop the Corentyne Block,” the company added.
It had stated that it was “reviewing all alternatives to safeguard its interest in the Corentyne block and Guyana and has sent the Government of Guyana a letter activating a 60-day period for the parties to the Corentyne block Petrol-eum Agreement to make all reasonable efforts to amicably resolve all disputes via negotiation, as provided for in the Coren-tyne block Petroleum Agreement.”
Jagdeo had contended in June that CGX will not “play” the government of Guyana, as he said that cabinet would have been meeting to discuss the submission of Notice of Potential Commercial Interest for the Wei-1 discovery to the government.
He explained then that he was informed by Minister of Natural Resources Vickram Bharrat of the submission of the notice. “I have not examined it as yet but we will do so and next week it will go to the Cabinet but let me make it clear, CGX will not play the government of Guyana,” he said
The Vice President said that 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. 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.”
He stated that he was being “blunt” about the matter because “we have given them time as per the law to do all they had to do but this is crunch time now. If they are now saying they are moving to a project they have to show us what this project is and show how they gonna finance the project.”
Late August after the licence expired, he said that the government was under “no pressure” to make a decision on the joint venture since, “it’s not like the renewal of a licence is dependent on our decision. They do not have a licence at this stage.”
