Dr Suresh Narine
Canadian-based oil and gas exploration company CGX Energy Inc announced Monday that it will commence arbitration proceedings against Repsol Exploración SA in connection with the expiry of the petroleum prospecting licence (PPL) covering the Georgetown Block.
CGX, which along with Repsol, Tullow Guyana BV and YPF SA formed a four-company consortium that built the Jaguar-1 well in the Georgetown Block, believes that Repsol acted in “bad faith”, according to Co-Chairman Dr Suresh Narine.
The company is of the view that the terms of the joint operating agreement governing the Georgetown Block were still in effect when Repsol allowed the Georgetown PPL to expire and sought out a new petroleum prospecting licence covering virtually the identical acreage offshore in Guyana, which is now known as the Kanuku PPL.
Furthermore, Repsol was aware of CGX Energy’s continued interest in the Georgetown PPL and under the joint operating agreement, was obliged to seek renewal of the Georgetown PPL alongside CGX Energy.
The company further alleges that Repsol, which owned 15 per cent of the PPL, as against CGX’s 25, accepted a US$ 15 million payment. The Jaguar well was closed due to overpressure issues and the company said before closure, it had indicated its continued interest in exploration activities.
Repsol began offshore drilling of the Jaguar- 1 well in Guyana on December 5, 2011.
Interest in the Guyana/ Suriname basin amplified after explorer Tullow struck oil last year off French Guiana, raising the prospect of the opening of a major offshore oil-producing province in South America.
The United States Geological Survey ranked Guyana as having the second most attractive underexplored basin in the world with a possibility of 15.2 billion barrels of oil. If a finding was to be made, production targets would be estimated at 50 million barrels per year, which would be about 140,000 barrels per day.
