Joint Venture Partners Explore Legal Options Following Guyana’s Offshore License Termination Notice
In response to a recent termination notice from the Guyanese government regarding their license for the Corentyne block, joint venture (JV) partners CGX Energy from Canada and Frontera Energy are evaluating all legal avenues to protect their interests. The government’s communication indicated that the petroleum prospecting license and associated petroleum agreement for the Corentyne block have been terminated, asserting that there are no valid grounds for any extensions related to exploration or appraisal obligations.
The government has stated that if it is found that the permit remains in effect, or if the JV holds another type of applicable license, the notice serves as a 30-day warning of the intention to cancel such a permit. Despite the government’s assertion of termination, they have invited CGX Energy and Frontera to submit any representations regarding the license before a final decision is made, which is due by March 10, 2025.
In their response, CGX Energy and Frontera maintain that their interests in the Corentyne block are intact, arguing that the petroleum agreement has not been annulled. The JV is exploring all legal options to assert their rights and plans to formally respond to the government. They expressed their commitment to resolving the situation swiftly to continue their investments and efforts in the Corentyne block, aiming to benefit both the people of Guyana and their shareholders.
The JV made a significant discovery, the Wei-1, during the Kawa-1 appraisal program in 2023, marking their second find in the Corentyne block and fulfilling their obligations under the current license period. As part of their strategy, the partners are considering a potential farm-down of their interests in the block, which they currently hold entirely—Frontera with a 72% stake and CGX with 28%.
Additionally, the JV has enlisted SIA, a partnership between Subsea7 and SLB, to develop a conceptual field development plan for the northern section of the Corentyne block, focusing on subsea design, well planning, and production facilities.
Guyana has seen a surge in oil discoveries since 2015, with ExxonMobil actively developing multiple projects and aiming for the Hammerhead project to be the seventh deepwater oil initiative in the country. This development is expected to significantly boost the country’s production capacity, targeting an increase of 120,000 to 180,000 barrels per day by 2029, bringing total production to nearly 1.5 million barrels per day. As Guyana continues to evolve as an oil producer, it is also making strides toward launching its first gas project, with recent governmental approval for a $51.2 billion investment in a flagship gas-to-energy initiative.
