Critical decision awaits outcome of meeting

Stabroek News
June 13, 2000

The critical decision about the future of the CGX Energy Inc's oil exploration investment lies in the outcome of the talks between the governments of Guyana and Suriname being held today.

"The bottom line is that we will await the outcome of the meeting and based on the results we will make our decision," Director of CGX and a founder of the company, John Cullen, told Stabroek News yesterday. "This is a very big week for us. We have to make a decision very shortly."

The two sides will convene a two-day meeting in Georgetown beginning today to pursue a course of action to end the impasse which led to the removal of the CGX rig from an offshore area which both countries claim to be theirs.

Cullen said his company did not meet Surinamese officials before penning the agreement in 1998 with the Guyana government, which granted CGX permission to explore for oil off the Corentyne coast. The company was aware that the area was contentious before undertaking the investment but was also cognisant that only Guyana had issued licences for exploration previously, the CGX official stated.

A CGX statement issued yesterday said over the last week the company had been contacted by a number of interest groups in both Guyana and Suriname expressing support for a peaceful resolution to the current dispute. The company is encouraged by the contact made by the groups. CGX President Kerry Sully was quoted as saying: "What appears to be occurring is that many individuals and groups in both countries are agreeing and hopeful that a fair and lasting solution can be found."

Cullen stressed that the issue was a government-to-government one and must be handled at that level. The company has not attempted to intervene in the negotiations but prefers to await the conclusion of the discussions. He said that given the positive outlook being portrayed by both governments, it was envisaged that an agreement could be arrived at.

In the meanwhile, the company has flown home some of the staff who were on the rig, pending the decision to be made. It has also suspended a fuel contract with a local distributor in the interim.

Cullen said there was adequate fuel on the rig to keep the current operations running in this waiting period.

The CGX director said the company had sunk "many millions" into the investment which could not be recovered. The US$70,000 daily average cost to have the rig on standby is being borne by the company and is not recoverable.

Cullen said there was a clause in standard international law called force majeure which protected the "bleeding of funds" when unforeseen circumstances arose. He explained that CGX was not seeking to implement this clause as yet because it was generally used only in situations when companies were pulling out from an investment. Abandoning the drill site was not an option being looked at, at this stage, he stated.

Cullen said the Guyana government has been accommodating in its discussions with the company.

Depending on what is achieved at the talks, the rig could be moved back to its target area within five days.

"We could set it up and start drilling by late next week if all goes well," Cullen said.

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