Where does oil exploration go from here?
December 11, 2000
The June 3rd eviction of the CGX oil rig from Guyana's waters by the Surinamese navy did not only scupper a perfectly good investment which may never return. It also threw into disarray Guyana's oil exploration programme which was showing signs of robust growth. Once the rig had been chased away, Suriname not only thwarted Canada's CGX but also any other investor who was toying even remotely with the idea of sinking investment dollars into oil exploration offshore Guyana particularly to the east. This setback was further compounded by Venezuela's sabre rattling to the west when it expressly warned explorers who had been legitimately licensed by Guyana to back off. Subsequently, as the temperature rose Century Oil quietly decided to shelve its plans in the western sector of the offshore zone.
The inability of the government to defend the CGX rig and stand its ground with Suriname left this good-faith Canadian investor and its shareholders up the proverbial creek without as much as a twig let alone a paddle. Century, no doubt, quickly read the situation and determined that it would be just as vulnerable were Caracas to put words into action. Guyana and its diplomatic and military machinery seemed no match for the Venezuelans who with a mere threat sent shivers down the collective spine of the investing community.
It is a signal lesson to the government on the dangers of allowing investors to plunge headlong into investments in parts of the country that are threatened by territorial wrangling. In both instances Guyana rightly maintains it has full sovereignty. This should have been underlined by a credible enough and regular presence in the area. If Guyana did not perceive the real threat to investors prospecting in this area then it was a sad and inexcusable misreading of the situation. What were the various intelligence arms of the government, our envoys and the ministry of foreign affairs doing?
So where does oil exploration go from here? The damage has already been done but despite the CGX fiasco the government should aggressively be seeking out new investors for exploration both on and offshore and getting wells sunk.
Firstly, the government, the petroleum division and Go-Invest should assure those still interested that their exploration programmes will be able to go ahead without hindrance. Besides CGX and Century other companies including Maxus Guyana Limited, Exxon and Eni SPA were prospecting in Guyana's waters. Their requirements to enter an expedited exploration regime should be looked at and decisions taken by the government.
Secondly, given the current favourable conditions on the petroleum market, the government and Go-Invest should start lobbying individual oil companies to interest them in the potential here. This would require a well thought out pitch and a lobbying campaign. We must start this type of direct marketing if we ever hope to attract external investment in any part of the economy.
Thirdly, since Hunt Oil failed to uncover oil in commercial quantities in the Takutu Basin there has not been an onshore explorer. While just as expensive, the onshore well is not fraught with the dangers that have hindered offshore activities recently. More attention should be focused on this sector.
Fourthly, the offshore zone can pragmatically be sectioned into zones of likely tension with neighbours and those that are definitely trouble free. The immediate focus should be on marketing the trouble free zones while a comprehensive strategy is plotted to deal with problems to the east and west and we gradually begin to re-establish a physical presence in those areas. Guyana must continue to press the Surinamese government to open real dialogue on resolving the outstanding issues that forced CGX from its spot.
Not much has been heard from government on oil exploration following the CGX fiasco. Lessons should be learnt from the eviction but it mustn't deter our drive to unearth our own oil wealth.
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