PPP/C Govt. still grants CGX one year extension to drill well on Corentyne block

PPP/C Govt. still grants CGX one year extension to drill well on Corentyne block

Even though CGX Resources Inc., a subsidiary of Canada-based exploration company, CGX Energy Inc., has failed to honour its previous exploration commitments on the Corentyne Block, the People’s Progressive Party/Civic (PPP/C) administration has still granted it a one year extension to get its act together. According to the oil company, it has been granted a one-year extension (November 27, 2020 to November 27, 2021) to drill at least one well on the offshore concession.

Based on the original work commitments in the Corentyne block agreement, CGX was supposed to drill at least four wells by 2019. But this did not occur. CGX has only drilled two wells in 2012, both of which were abandoned — Eagle-1 was a dry hole and Jaguar-1 was capped for safety concerns. Since then, CGX has made promises to drill more wells in search of oil.

Upon examining its 2012 agreement, Kaieteur News found that the initial period of CGX having the licence lasted for a period for four years (2012 to 2016).Within that time, the company was expected to drill two wells, one within 30 months and another within 18 months. As noted earlier, two wells were drilled during that time. Following this, CGX got the first renewal of the licence. This lasted for three years (2016 to 2019). During this time it was expected to drill two more wells. The contract states that CGX must drill one well within 18 months and at the end of this period; elect to give up the entire contract area except in those parts where it found oil or gas. If it does not want to give up the whole block, then it has to commit to doing more work before the three-year period is up. Before the first renewal period comes to an end, CGX was expected to drill another well. At the end of it, the company can once again choose to give up 25 percent of the block or simply hand over everything.

Instead of honouring all terms of the contract it signed with Guyana back in 2012, CGX was able to get the APNU+AFC administration to water down its work programme from having to drill two wells, to only drilling one well. According to the company’s quarterly highlights for the period ended June 30, 2020, CGX disclosed that the APNU+AFC regime had approved an addendum to its work programme on December 15, 2017.

On December 19, 2017, Kaieteur News would have reported the company’s promise to drill an exploration well by November 27, 2019; acquire additional seismic or conduct seismic reprocessing by November 27, 2020 with another exploratory well in the Corentyne block by 2022. However, the well which was called “Utakwaaka” and scheduled to be drilled in November 2019, was never drilled.

During the year ended December 31, 2019, CGX in its financial statements said that it received another modification to the addendum.
Kaieteur News understands that is resulted in the order of the work programme being changed. The company was then expected to complete additional seismic acquisition or seismic processing first and then drill one well. Again, no well was ever drilled.
It therefore means that even with the watered down work programme, CGX still did not honour all of its obligations.

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