CGX Energy Inc. along with its Canadian partner, Frontera Energy, could lose its chance to develop 514 to 600 million barrels of oil in the Corentyne block as the Government of Guyana appears to have no interest in granting any further extensions for its exploration licence. This means that the Corentyne block could be up for grabs by new investors.
When asked if the government has come to a decision on CGX’s request for a renewal of the licence during his press conference yesterday, Vice President, Dr. Bharrat Jagdeo said “It went to the Cabinet today. There were discussions. The Cabinet is not inclined to grant the license or continuation of the licence.”
He added, “However, the matter was not concluded. There may still be other issues that the Cabinet will have to discuss, but it’s not inclined to at this point in time.” This presents a significant opportunity for new entrants into Guyana’s burgeoning oil industry.
The purported hesitance to renew the company’s licence comes after CGX and its joint venture partner, Frontera Energy Corporation, filed a notice of potential commercial interest for their Wei-1 well discovery just a day before their current extension was set to expire. CGX Energy and Frontera Energy have been operating the Corentyne Block with the expectation of making a final investment decision by 2026 and potentially starting oil production by 2030. This joint venture was poised to become the next major exploration project in Guyana, following the success of the ExxonMobil-led consortium.
However, CGX’s history with the Corentyne Block has been fraught with delays and missed deadlines. Last June, CGX received a significant extension for their Corentyne Block licence, which had expired following the filing of a notice of potential commercial interest for the Kawa-1 discovery. This extension was intended to provide CGX with additional time to explore and develop the area, which they had touted as holding significant potential. Despite these extensions, CGX has struggled to meet its work obligations, resulting in a loss of credibility with the government.
This track record has evidently influenced the government’s decision. In a recent press conference, Jagdeo said, “CGX will not play the Government of Guyana.” He underscored the administration’s dissatisfaction with CGX’s repeated delays and lack of substantial progress on the Corentyne Block noting, “For a very long time, they’ve been jerking people’s strength— 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.”
Adding to the concerns, CGX has already lost two other oil blocks, Berbice and Demerara, due to its inability to meet work obligations. Last year, CGX also experienced a reduction in the size of their Corentyne Block due to relinquishment clauses in their contract. The original area of 6,200 square kilometers was reduced to 993.9 square kilometers.
