Repsol, CGX to drill oil wells by end of year

Two other oil companies, Repsol and CGX, are gearing up to begin offshore drilling operations here by the end of this year.

Minister of Natural Resources Raphael Trotman yesterday confirmed with  Stabroek News that that Canadian company, CGX is expected to begin drilling this year.

Sources told Stabroek News that Spanish explorer, Repsol also has similar plans and has already begun working towards this end with the intention  to announce their rollout by midyear.

Last December, CGX had announced that it had renegotiated its work plan with the Guyana Government which would see an offshore exploration well being drilled in the Corentyne block by November 27, 2019 and it has also agreed to surrender acreage from two blocks.

In a statement from Toronto, Canada, CGX said that as part of the renegotiation of the Demerara, Corentyne and Berbice Petroleum Prospecting Licences with the government, the Company has also agreed to relinquish 25% of the acreage of both the Corentyne and Demerara blocks to the Government of Guyana.

CGX had been one of the early explorers in the Guyana-Suriname oil basin. Its drilling in 2000 of an offshore well led to its rig being chased away by the Suriname military. This sparked a diplomatic dispute which was largely settled in Guyana’s favour at the International Law of the Sea Tribunal in Hamburg, Germany. CGX drilled several wells offshore thereafter but did not find oil in commercial quantities. It also attempted several wells on land in Berbice.

The company signed an agreement with Guyana that caters for a 53 to 47 share of profit oil in favour of the government. There is a 1% subsumed royalty which is paid by the government. There is no article in the CGX production sharing agreement dealing with a signing bonus.

The deal between ExxonMobil’s subsidiary and the Guyana Government caters for a 2% royalty for Guyana after which the two partners share profit oil 50:50. Guyana also got a signing bonus of US$18m.

This CGX agreement was signed in 2013 by then President Donald Ramotar.

The Department of Public Information yesterday stated that Trotman said that government was excited about the company’s plans and that Repsol will also be drilling. “CGX has remained committed to Guyana, they have gone through different periods and we are hoping that we could work with them. They are expected to do some drilling this year and we are excited about that,” he is quoted as saying.

“The expectation is that they begin drilling by the end of the year. We also have Repsol that will also do some drilling later in the year or early next year,” he added.

This newspaper understands that Repsol will as soon as next month be also announcing its drilling plans for its operations.

The company is in a partnership with the United Kingdom-headquartered Tullow Oil  and French major Total in the Kanuku Block where working  interest stakes are divided as follows: Repsol and Tullow 37.5% each while Total has  25 percent.

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