Last Price

0.39

Change

-0.01

Open Price

0.39

Volume

10,893

Prev. Close

0.40

Regional News

April 27, 2007
Oil riches await -Law of Sea-ruling
Caribbean 360.com by Bert Wilkinson

GEORGETOWN, Guyana, April 27, 2007 - A much anticipated decision by a world court that will draw - once and for all - a maritime border between Guyana and Suriname could dramatically change the fortunes of the two nations if predictions about the abundance of oil and natural gas deposits prove true.

Final word is expected in the next few months from the United Nations International Tribunal for the Law of the Sea on exactly where the territorial waters of Guyana end and where Suriname's begin. Then the celebrations can start, and the big oil companies can crank up their offshore oil drilling rigs.

In June 2000, Surinamese gunboats expelled a rig that was exploring for oil and gas deposits in an offshore area to which both countries lay claim, sparking one of the worst diplomatic incidents in the 15-nation Caribbean Community (CARICOM), of which both are members.

Suriname's contention was that the rig, rented by Toronto-based CGX Energy Inc., one of the world's smallest oil companies on a concession granted by Guyana, was in its waters. Guyana begged to differ, and called out its equally under-funded and ill-equipped military to retaliate against its neighbour.

But quick intervention by the regional integration movement, led by prime ministers of the CARICOM bloc, averted what observers said would have been a costly if not laughable war, as neither side had more than 4,000 troops in arms, a combined air force of less than a dozen planes, and ocean fleets with no more than 10 vessels.

Analysts say rather than agree to jointly develop and share any wealth flowing from undersea oil wells and natural gas fields, the two countries have opted to bicker as to where their borders end, effectively discouraging giants of the industry from investing in their countries.

Both are surrounded by oil-and gas-producing giants. English-speaking Guyana shares borders with Brazil and Venezuela, the world's fifth largest producer, while Dutch-speaking Suriname borders Brazil.

While drilling for freshwater, Suriname in the 1970s found oil on land in its western Atlantic shore regions. Its neighbour to the west has not been so lucky, thanks in part to the reluctance of international oil companies to drill in waters disputed between the two.

Incidentally, oil rigs have also stayed away from Guyana because neighbouring Venezuela lays claim to two-thirds of the country. That dispute is likely to drag on for years as Venezuela is not a party to the tribunal and so the dispute will have to be settled in a different arena.

Suriname and Guyana are therefore now banking on a mid-year decision by the International Tribunal that would once and for all settle the dispute and open the way to millions of dollars in oil investment in their countries. Major oil and gas finds could dramatically turn around their economic fortunes. Combined, the two countries have a population of 1.2 million in a land area almost twice the size of Britain -- among the lowest population densities in the world.

"A settlement of the issue will certainly attract the kind of attention and investment level that have been lacking. The big companies have essentially stayed away from both countries because of that. We remain cautiously optimistic about the future," said Newell Dennison, head of the petroleum division at Guyana's Geology and Mines Commission.

The U.S. Geological Surveys (USGS) says its studies have shown that the area contains "giant" (more than 500 million barrels) and "elephant" (more than 100 million barrels) oil and fields, dubbing it one of the richest virgin regions in the world. Major finds here could reduce US dependence on Venezuela.

The USGS's high ratings of the area has helped to attract small and hitherto unknown companies like CGX, which has invested more than seven million dollars in at least two unsuccessful attempts to strike "black gold".

For its part, Suriname has been doing nicely with the production it is getting from its oil wells on land in the west. It is planning to drill as many as 160 onshore wells while upping production from about 7,000 barrels a day to at least double that amount.

Denmark's Maersk Oil and Spain's Repsol YPF have been exploring offshore areas known to be Suriname 's territory, while Repsol, CGX and Exxon have concessions across the way in Guyana.

All are known to be mobilising for the court ruling that is likely to lean towards equidistance. Staatsolie , Suriname's state oil company, reported 2005 record sales of 201.3 million dollars. This is a 51.5-percent increase compared to 2004. Staatsolie also put 2005 pre-tax profits at 105.2 million dollars, compared to 59.7 million for 2004.

In recent months, oil executives have visited both capitals to indicate a readiness to start once the final ruling is handed down by the court. Oral hearings ended in Washington DC last December.

"There should be a boom in the interest for oil," says Guyana's President Bharrat Jagdeo, who took the matter before the Law of the Sea Tribunal three years ago. "We are hoping that as soon as we have a ruling on the arbitration we may see exploratory activities in the particular block bordering Suriname ."

Said CGX chief Kerry Sully: "It's pretty exciting. I think that this is exactly the place to be over the next five to 10 years and it will become a significant part of your economy as you go forward from that period."

News

Oct 10, 2014

CGX Energy Announces Bridge Loan and Ope...

Sep 22, 2014

CGX Energy Announces 3D Seismic Survey a...

Presentations

Jun 25, 2014

2013 Annual General Meeting

Mar 12, 2014

Corporate Presentation

CGX at a Glance