–initiates process to relinquish Demerara, Berbice blocks

FOLLOWING “constructive” discussions with the Government of Guyana, CGX Energy Inc. has announced that together with its joint venture partner, Frontera Energy Corporation, the company will be focusing exclusively on the exploration opportunities in the Corentyne Block, offshore Guyana.
“Our long partnership with the Government and People of Guyana is a critical aspect of our decisions. We have a significant opportunity on the Corentyne Block following the discovery at Kawa-1. The joint venture is moving ahead rapidly to advance our programme and unlock the potential of the Corentyne Block, for the benefit of all stakeholders,” Executive Co-Chairman of CGX’s Board of Directors, Professor Suresh Narine, said in a statement released recently by the company.
In February, CGX, less than two months after encountering hydrocarbons at the Kawa-1 well in the Corentyne Block, announced that its drilling campaign had produced greater results.
The company, in a press statement, announced that the Kawa-1 well encountered approximately 177 feet (54 metres) of hydrocarbon-bearing reservoirs within Maastrichtian, Campanian and Santonian horizons based on initial evaluation of Logging While Drilling (LWD) data.
Those intervals are similar in age and could be correlated using regional seismic data to recent successes in Block 58 in Suriname and the lucrative Stabroek Block offshore Guyana.
Owing to the results of the Kawa-1 exploration, CGX Energy Inc. related that it will continue to integrate its findings from the Kawa-1 well into preparations for its second exploration well called Wei-1, to be spud in the third quarter of 2022.
The Wei-1 exploration well will be located approximately 14 kilometres northwest of the Kawa-1 exploration well in the Corentyne Block, approximately 200 kilometres offshore from Georgetown, Guyana.
The Wei-1 exploration well will be drilled in water depth of approximately 1,912 feet (583 meters) to a targeted total depth of 20,500 (6,248 metres) and will target Maastrichtian, Campanian and Santonian aged stacked channels in a western channel complex in the northern section of the Corentyne Block.
In outlining how the company plans to move forward with its operations in the Corentyne Block, Professor Narine said: “To do so required a collaborative effort to resolve outstanding commitments for the Demerara and Berbice blocks and we are appreciative of this agreement. We are also engaged with the Government of Guyana in a collaborative effort to maximise opportunities to unlock value for the Berbice Deep Water Port.”
Given the importance of the Demerara Block to Guyana, CGX reported that it has, in principle, reached an agreement with the government to allow for the relinquishment of the Demerara Block through a mutual termination agreement which terms remain to be defined and documented.
Such termination agreement would allow relinquishment of the Demerara Block in a timely manner, allowing the people of Guyana to benefit from exploration activities under the stewardship of interested parties.
ON Energy, which is a 62.5 per cent owned subsidiary of CGX and is the holder of the Petroleum Prospective Licence of the Berbice Block, has also been in discussions with the Government of Guyana, and has reached an agreement in principle to relinquish the Berbice Block through a mutual termination agreement, which also remains to be defined and documented, so that the Berbice Block could be relinquished in a timely manner, similar to the Demerara Block.
As it is now, ExxonMobil is the key stakeholder in most of the ongoing oil and gas activities within Guyana’s waters.
The company has four sanctioned projects offshore Guyana. Of those, Liza Phase One is producing approximately 130,000 barrels per day, using the Liza Destiny floating production storage and offloading (FPSO) vessel, while the Liza Phase Two, which started production in February, is steadily ramping up to its capacity of 220,000 barrels per day, using the Liza Unity FPSO vessel.
The third project, Payara, is expected to produce 220,000 barrels per day; construction of its production vessel, the Prosperity FPSO, is running approximately five months ahead of schedule, with start-up likely before year-end 2023. The fourth project, Yellowtail, is expected to produce 250,000 barrels per day when the One Guyana FPSO comes on stream in 2025.
ExxonMobil is also moving ahead with plans for its fifth development project in the Stabroek Block, Uaru, which is expected to produce up to 250,000 barrels of oil per day.
“These projects will bring huge benefits to Guyana,” President of ExxonMobil Guyana, Alistair Routledge, said during a brief interview released by ExxonMobil.
It was reported that returns from the sector are expected to catapult Guyana to the ranks of wealthiest countries in the Western Hemisphere, thereby increasing the government’s fiscal space to invest in initiatives geared at expanding the economy, and improving the overall welfare of citizens.
“Guyana is now poised to be one of the wealthiest countries in the hemisphere; we intend to employ the gains from exploiting these deposits into initiatives geared at expanding the economy, improving competitiveness, giving people the best social services, increasing productivity, enhancing food production, and building new sectors,” President, Dr. Irfaan Ali had said in his keynote address during a virtual faculty workshop on the microeconomics of competitiveness hosted by the Harvard Business School.
In painting a vivid image of what is expected of the oil-and-gas sector in the near term, Dr. Ali said that, by 2025, operating cash flow, based on total investment, is expected to reach US$3.5 billion.