CGX encouraged by Guyana's proposal
Warns further delays could scupper drilling

By Desiree Jodah
Stabroek News
June 9, 2000

CGX Energy Inc officials are pinning their hopes on June 13 for a positive reply from Suriname on a Memorandum of Understanding (MOU) tabled by Guyana which would allow the company's rig to begin drilling for oil.

The CGX rig was forced out of Guyana's waters under the cover of darkness by the Suriname coast guard on Saturday morning in a dispute over maritime boundaries.

CGX yesterday noted in a statement that the cost of having the oil rig, storage barge, supply vessels and helicopter, along with an international crew was significant. CGX warned that further delays would make it difficult for exploration in the basin to continue. Officials have estimated the cost at about US$70,000 per day.

The CGX officials who arrived in the country following the rig's eviction, said the company was focusing on the June 13 date and was not currently looking beyond that.

According to the statement, the company was encouraged by the proposed MOU which was reported in yesterday's edition of the Stabroek News.

Officials said they were also heartened by statements from the government that its immediate objective was to have the company's rig return unhindered to its original location and that the representatives of Suriname have undertaken to respond by June 13, 2000.

The company believes the solution contained in the MOU was workable and is also of the view that the provisions were consistent with historic exploration in the Corentyne basin and the administration of its licence over the last two years.

The MOU which was tabled by Guyana for consideration by the Surinamese, proposed that with respect to petroleum licences already conferred by Guyana up to and including June 14, 1999 and which fall within the area of overlap i.e. the area delineated by the lines North 10 East (True) and North 33 East (True) the following shall apply until the frontier between Guyana and Suriname is determined:

1) Rights granted in the area of overlap shall be fully respected and not disturbed and that the two governments agree that nothing should be done to impair these rights;

2) That in relation to the obligations of the licencees in the area of overlap the two governments agree that nothing should be done to increase the obligations of the licencees in the area of overlap; 3) Both parties agree that the MOU provisions do not prejudice their respective claims in the area of overlap.

Since starting exploration two years ago, CGX said it believes that with the use of modern technology the regional geology supports the possibility of a number of turbidite fan targets offshore both Guyana and Suriname.

CGX believes that success in the Eagle target would significantly enhance the profile of the basin for the benefit of the people of both countries. "CGX has a jack-up rig in the area - we strongly encourage the governments of Guyana and Suriname to take advantage of this opportunity," the statement added.

CGX is a Canadian public company which is focused on the exploration of oil offshore in the Guyana basin. The statement said CGX's activities have been financed by investors in Canada, the USA, the Caribbean, the United Kingdom, Europe and Asia. There are currently over 3,000 shareholders who have significant interest in the exploration of the basin. "It is CGX's view that certain elements of the international investment community are watching the current developments closely," according to the statement.

There are about 50 crew members of various nationalities currently on board the rig.

President and Chief Executive Officer of CGX Kerry Sully said officials were briefed by government functionaries yesterday. CGX officials will remain in the country until the matter is resolved.

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