Frontera, CGX seek alternatives to preserve offshore oil block in Guyana

Toronto-listed oil producer Frontera Energy and its affiliate CGX Energy are seeking alternatives to resolve a dispute with Guyana's government over rights to retain an offshore block and continue exploration work there, Frontera said on Thursday.

Guyana'a Vice President Bharrat Jagdeo said in August the government had opted not to approve the companies' application to appraise a discovery in the block, which would have given them more time with the license, as the South American nation was not confident the firms could find a financial partner.

"Frontera and its joint venture partner CGX Energy are firmly of the view that the Corentyne block Petroleum Agreement remains in place," Frontera said in a release to announce its quarterly results, adding that the vice president's comments have "materially affected" the partnership.

"The joint venture... has sent the government of Guyana a letter activating a 60-day period for the parties to the Corentyne block Petroleum Agreement to make all reasonable efforts to amicably resolve all disputes via negotiation," it added.

If they do not resolve the dispute in the 60-day period, they can go to arbitration or a sole expert, according to the agreement's terms.

Analysts and experts were expecting Corentyne to be the next area to be developed in Guyana, which could have added diversity to an industry completely dominated by a consortium led by US major Exxon Mobil.

Corentyne is the only area Frontera and CGX have left in Guyana, after returning two other blocks to the estate, Demerara and Berbice. In 2022, the companies announced the presence of light oil and gas condensate in Corentyne and have focused their efforts there since.

A CGX subsidiary has a separate project in Guyana for a $130 million port that can accommodate vessels of up to 150 meters in length, which is starting commercial operations this month after the company negotiated long-term agreements for its use, it said.

(Reporting by Kemol King in Georgetown and Marianna Parraga in Houston~ Editing by Keith Weir)