BY SAMUEL SUKHNANDAN
Canadian oil company CGX Energy Inc said the legal arbitration it has brought against Repsol was a last resort after efforts to redress its “transgression through dialogue” did not work.
“CGX maintains that it is imperative it protects the rights of its shareholders, many of whom are Guyanese, both locally and in the diaspora, in terms of the Georgetown licence,” the company’s general counsel Michael Galego told Guyana Times International in a recent interview.
Explaining the details of the dispute between his company and Repsol, CGX Cochairman, Dr Suresh Narine said, while at one point in time CGX owed US$ 15 million to the consortium which drilled the Jaguar 1 well in the Georgetown licence, it has repaid this sum.
Under the Joint Operating Agreement (JOA) between the consortium which had included YPF, Tullow, Repsol (15 per cent ownership) and CGX (25 per cent ownership), arbitration proceedings will be filed in London. Repsol will have a certain period, governed by the terms of the JOA, to respond to the proceedings, Galego said.
Under the terms of the agreement, Repsol was constrained to apply for an extension of the Georgetown licence, within which the Jaguar 1 well, which was plugged and abandoned, was drilled. That licence should have included a pro rata ownership by CGX, which opted to stay in the licence, while Tullow and YPF opted to abandon the licence.
Instead, Repsol allowed the licence to lapse, even when it only owned 15 per cent of the licence.
Subsequently, Repsol applied for an entirely new licence, the Kanuku licence, covering substantially the same area covered by the old licence, but now it acquired 100 per cent ownership.
“This is a blatant act to deprive the CGX shareholders of their rightful percentage of ownership over the licence,” said Galego.
“In the interest of our shareholders and in keeping with the principled fashion in which we have always carried out our functions and responsibilities to the people and government of Guyana, CGX cannot allow this matter to go unaddressed.”
He said it is CGX’s view that all companies operating in the basin – large or small – must be required to conduct themselves within the highest levels of proprietary and in accordance with Guyana and international laws.
“We are not prepared to stand by and let this kind of bargaining in bad faith creep into the basin,” he added.
CGX, though the smallest independent company operating in the Guyana-Suriname basin, has invested the most on exploration in the basin and has drilled the most wells.
Professor Narine said the company is solely focused on the Guyana-Suriname basin, and was instrumental in Guyana’s legal challenge to Suriname after Surinamese evicted the company from a drill rig via gunboat. He said the company has, over its more than 15-year history in the basin, always taken the principled approach to the resolution of crises through amicable and legal means.
