Guyana reclaims Corentyne oil block, terminates CGX-Frontera agreement and licence

The Guyana government has officially reclaimed ownership of the Corentyne oil block, which was operated by the joint venture (JV) of Canadian companies CGX Energy Inc. and Frontera Energy Corporation.

On Thursday, the JV stated that they had received communication from the Guyana government, notifying them of the decision to terminate their petroleum agreement and prospecting licence for the Corentyne Block offshore Guyana.

“The Government is of the view that the Petroleum Agreement and Prospecting Licence are at an end,” the communication stated, adding that the Government of Guyana “hereby terminates the Petroleum Agreement and cancels the Prospecting Licence with immediate effect,” according to the JV’s statement.

Despite the government’s position, the companies maintain that their interests in the Corentyne Block and the associated licence remain valid and in good standing, asserting that the Petroleum Agreement has not been terminated.

The Joint Venture, along with its shareholders, continues to invite the Government of Guyana to amicably resolve the issues affecting their investments in the Corentyne Block. However, they have also signalled their intent to enforce their legal rights should an agreement not be reached.

“Should the parties not reach a mutually agreeable solution, the Joint Venture and its shareholders are prepared to assert their legal rights,” the statement read.

Last month, CGX and Frontera were given a 30-day period to present arguments as to why the government should not terminate their holdings in the Corentyne oil block, citing their failure to develop the asset in a timely manner.

The joint venture has previously faced challenges in developing its oil asset and had sought extensions and grace periods from the government.

At the government’s request, the JV was at one point required to relinquish the Demerara Block, which it once operated, due to financial difficulties.

At the time, Vice President Dr Bharrat Jagdeo noted that the Joint Venture was facing both capacity and financial constraints, adding that it was not the government’s responsibility to cushion them if they could not fulfil their obligations.

The JV was warned last month that failure to provide satisfactory representation would result in their petroleum agreement and licence becoming invalid by 10 March 2025.

Despite the government’s stance, the JV stated on Thursday that it “looks forward to expeditiously resolving the matter and continuing its multi-year efforts and investments to realise value for the people of Guyana and its shareholders from the Corentyne Block.”