Govt. to improve PSA for CGX’s latest discovery

Feb 04, 2022 News

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Kaieteur News – Vice President, Bharrat Jagdeo disclosed on Thursday that the latest discovery made at the Kawa-1 well in the Corentyne Block will no doubt accelerate pressure on government to now get its model Production Sharing Agreement (PSA) in place once and for all.

Acknowledging that the PPP/C Government is prepared to rise to the occasion, Dr. Jagdeo was keen to note that the model PSA will address issues such as higher royalty rates, the need for ring fencing provisions, as well as those related to taxes.
Speaking with members of the media at the Arthur Chung Convention Centre (ACCC), the Vice President said, “CGX Energy Inc. has found oil and there may be now increased pressure because if they move swiftly to production then we will have to get a model PSA in place.”
The former Head of State said work on the PSA was put on the back burner since ExxonMobil was the lone explorer marking all the commercial discoveries in the Stabroek Block.
The Vice President said, “So there is urgency now to move to a model PSA that would correct many of the things we find are wrong with the last one that was signed with Exxon (the Stabroek Block PSA). And all new entrants would have to subscribe to the new conditions. I don’t want to get into too many details but issues raised such as high royalty rate, and ring fencing, those have to be looked at; tax treatment and a whole range of other issues have to be looked at.”
He added, “There are about 10 or 11 areas we identified to look at and they have to do with the fiscal terms.”
He alluded, nonetheless, that when the time arrives, the government would be ready to engage with CGX and its partner, Frontera.
It was on Monday, Canadian oil explorers, CGX Energy Inc. and Frontera Energy Corporation, disclosed that a discovery was made at the Kawa1-well in the Corentyne Block.
The joint venture partners noted 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. It was drilled to a depth of 21,578 feet (6,578 metres) and targeted the easternmost Campanian and Santonian channel/lobe complex on the northern section of the Corentyne Block.
The partners said these intervals are similar in age and can be correlated using regional seismic data to recent successes in Block 58 in Suriname and Stabroek Block in Guyana. The well also encountered hydrocarbon bearing sands in deeper strata (Coniacian or older). The companies said this will also be analysed and could become the target of future appraisal opportunities.
It was further noted that the net pay and fluid properties of the hydrocarbons across the shallow and deep reservoirs will now be confirmed with electric wire line logging and fluid sampling, with results to be disclosed as soon as practicable.
Frontera and CGX were keen to note that the Kawa-1 results support the geological and geophysical models used while noting that they have helped de-risk equivalent targets in other parts of the Corentyne licence area. The end of well forecast is currently projected to be the end of February 2022.
The Canadian duo said information on final well cost estimates and additional results will be announced upon completion of end of well activities. CGX, this newspaper understands, is currently assessing several strategic opportunities to obtain additional financing to meet the costs of the drilling programme.
Professor Suresh Narine, Executive Co-Chairman of CGX’s Board of Directors, commented that the results from the Kawa-1 well represent a positive milestone in the CGX journey as a pioneer oil and gas explorer in the Guyana Basin. “Together with our partner Frontera, CGX looks forward to continuing our socially and environmentally conscious approach to the development of Guyana’s oil and gas industry and port infrastructure. We are proud of our long partnership with the Government and People of Guyana and of our reputation as Guyana’s Indigenous Oil Company,” Narine expressed.
As for Orlando Cabrales, Chief Executive Officer of Frontera, he said, “We are very pleased to have successfully drilled the Kawa-1 well with our partner CGX. I commend the significant efforts of all the talented employees and contractors involved and their dedication to helping this partnership achieve this important milestone. We now have the ability to focus our efforts on potentially transformational opportunities and to continue our positive relationship with the Government and People of Guyana.”

NEXT WELL ON THE CARDS
Building on its recent offshore positive results at the Kawa-1 exploration well, the joint venture partners anticipate spudding its second commitment well, called Wei-1, in the northwestern part of the Corentyne Block in the second half of 2022.
They have since exercised their option to use the Maersk Discoverer semi-submersible mobile drilling rig for the Wei-1 well.
The partners were keen to note that this is an important step from a health and safety, efficiency, and operational perspective and will maintain both continuity in the exploration programme during a period of high demand in the region and consistency in working with a team familiar with the rig.
Kaieteur News understands that the Wei-1 exploration well will target Campanian and Santonian aged stacked channels in the western fan complex in the northern section of the Corentyne Block.
The Wei-1 well is named after one of the tallest peaks in the Pakaraima mountain range, which has commanding visibility over the surrounding terrain. Wei Tepu was historically used as a sentinel post by the Patamona people to guard against attacks.

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