Repsol, RWE Dea farm-out deal put on ice pending arbitration (Guyana)
Spanish oil giant Repsol has been prevented from selling a stake in an offshore Guyana block by the Caribbean country’s authorities.
CGX Energy Inc. has informed it has obtained an order from the High Court of the Supreme Court of Judicature in Guyana upholding the injunction from the Commercial Court of Guyana restraining Repsol Exploracion, S.A. (“Repsol”) from proceeding with any proposed farm-out of the Kanuku petroleum prospecting license (the “Kanuku PPL”) pending the hearing and determination of the arbitration proceedings started by CGX Resources against Repsol.
The Kanuku PPL covers substantially the same acreage as the Georgetown petroleum prospecting licence, CGX has said.
Professor Suresh Narine, Co-Chairman of CGX, commented: “We view this decision as strong support for CGX Energy’s rights in the Kanuku PPL and as the next step to regaining our participating interest in the acreage. A final resolution of this matter is in the best interests of not only CGX Energy, but also tangibly demonstrates the application of the rule of law in the very exciting Guyana-Suriname basin. CGX Energy has drilled the most exploration wells in Guyana and has extensive knowledge of the Guyana-Suriname basin. Furthermore, we worked diligently to meet all of the obligations with respect to our 25% participating interest in the Georgetown PPL and will continue to do so in respect of all petroleum prospecting licences in which we participate.”
Dewi Jones, Chief Executive Officer of the Company, added: “Since 2012, CGX Energy has spent approximately U.S.$130 million in exploration in the Guyana-Suriname basin with approximately U.S.$40 million relating to the acreage now known as the Kanuku PPL. CGX’s total spend in the Georgetown PPL since inception has been approximately U.S.$60 million. Given the significant investment already made in this petroleum prospecting licence, we are hopeful that this matter will be resolved quickly in the best interest of all parties and for the overall benefit of the continued exploration in the basin.”
To remind, CGX in December 2013 entered upon arbitration proceedings against Repsol in connection with the expiry of the PPL covering the Georgetown Block. CGX is of the view that the terms of the joint operating agreement governing the Georgetown Block were still in effect when Repsol allowed the Georgetown PPL to expire and sought out a new PPL covering virtually identical acreage offshore in Guyana, which is now known as the Kanuku PPL.
Furthermore, CGX has claimed that Repsol was aware of CGX’s continued interest in the Georgetown PPL and had an obligation to seek renewal of the Georgetown PPL alongside CGX.
In January 2014, CGX obtained an injunction order from the Commercial Court of Guyana restraining Repsol from proceeding with the 30% farm-out of the Kanuku PPL to RWE Dea AG or any other parties pending the hearing and determination of the arbitration proceedings commenced by CGX against Repsol. The injunction is still in place.