Joint Venture Partners Consider Legal Action Amidst Licensing Dispute
The Government of Guyana has issued a 30-day notice to Canadian joint venture partners CGX Energy and Frontera, signaling their intent to evict the companies from the Corentyne Block. This development follows ongoing disagreements regarding the status of the block, which CGX and Frontera initially set out to develop.
The Government claims that the companies no longer hold a license for the Corentyne Block due to insufficient development, while the joint venture partners maintain the opposite. Recently, the partners received a letter from the Guyanese government, allowing them until February 22, 2025, to present their case regarding their license status. The letter also stated that any existing license would become null and void by March 10, 2025.
According to the joint venture partners, the Government has taken the stance that both the License and the Joint Venture’s Petroleum Agreement have been terminated, asserting that there are no reasonable grounds to extend the Joint Venture’s appraisal or exploration obligations. Furthermore, the letter serves as a formal notice of the Government’s intention to cancel any license, should it be determined that one is still in effect.
Despite the government’s position, CGX and Frontera remain firm in their belief that they still hold a valid license. They indicated their intention to consult legal counsel as they explore their options for asserting their rights. The joint venture expressed a desire to resolve the matter swiftly and continue their efforts to bring value to the people of Guyana and their shareholders.
In recent years, CGX has made progress in the Corentyne Block, successfully drilling the Kawa-1 well and, more recently, the Wei-1 well as part of their appraisal program. However, they have faced challenges in advancing towards full development of the block.
In June 2024, the joint venture partners submitted a ‘Notice of Potential Commercial Interest’ regarding the Wei-1 discovery, a move interpreted by some as a last attempt to avoid relinquishing their rights to the block. Guyana’s Vice President Bharrat Jagdeo noted that for the joint venture to pursue offshore development in Guyana, they would need to provide detailed project plans and proof of financing.
CGX has previously relinquished two other offshore blocks in Guyana due to failure to meet development obligations. In their fourth-quarter update in December 2024, the joint venture partners expressed concern over comments regarding their Corentyne Block interest, stating that such remarks had created confusion among stakeholders and hindered their development efforts. They also indicated that they had reached out to the Guyanese government to activate a 60-day negotiation period, as provided in their agreement, to determine the future of the Corentyne Block.
