CGX Energy Inc. has announced that it will begin arbitration proceedings against Repsol Exploracion, S.A. (Repsol) in connection with the expiry of the petroleum prospecting license covering the Georgetown Block (the “Georgetown PPL”). 

A CGX release said: “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 license covering virtually identical acreage offshore in Guyana, which is now known as the Kanuku petroleum prospecting license. Furthermore, Repsol was aware of CGX Energy’s continued interest in the Georgetown PPL and had an obligation to seek renewal of the Georgetown PPL alongside CGX Energy.
CGX, even though is the smallest independent company operating in the Guyana/Suriname basin has spent the most money on exploration in the basin and has drilled the most wells and was instrumental in financing the Government of Guyana’s legal challenge to Suriname after Surinamese evicted the company from a drill rig via gunboat.
The company said that over its more than 15-year history in the basin, it has always taken the principled approach to the resolution of crises – through amicable and legal means and in the current situation, the company sought first to approach Repsol to redress its transgression through dialogue and only when this was exhausted did the company progress to the step of legal arbitration.
CGX insists that it is imperative to protect the rights of its shareholders, many of whom are Guyanese, both locally and in the diaspora, in terms of the Georgetown license.
The company noted too that while at one point in time CGX owed 15M to the consortium which drilled the Jaguar well in the Georgetown license it has paid every cent of this 15M.
Under the joint operating agreement (JoA) between the consortium which had included YPF, Tullow, Repsol (15% ownership) and CGX (25% ownership), arbitration proceedings will be filed in London, UK. Repsol will have a certain period, governed by the terms of the JoA, to respond to the proceedings.
Under the terms of the agreement, Repsol was constrained to apply for an extension of the Georgetown license, within which the Jauguar 1 well, which was plugged and abandoned, was drilled. That license should have included a pro rata ownership by CGX, who opted to stay in the license, whilst Tullow and YPF opted to abandon the license. Instead, Repsol allowed the license to lapse (it was not within Repsol’s right to do so – it only owned 15% of the license!). Subsequently, Repsol applied for an entirely new license, the Kanuku license, covering substantially the same area covered by the old license, but now it acquired 100% ownership. This is a blatant act to deprive the CGX shareholders of their rightful percentage of ownership over the license.
“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 blatant theft of property to go unaddressed,” CGX 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 lawlessness creep into the basin,” CGX stressed.
CGX Energy is a Canadian-based oil and gas exploration company focused on the exploration of oil in the Guyana-Suriname Basin.