(Reuters) – Guyana’s government has given a CGX Energy (OYL.V), opens new tab and Frontera Energy (FEC.TO), opens new tab joint venture a 30-day cancellation notice of its license to explore the offshore Corentyne block, where it has found oil, the Canada-based companies said on Tuesday.
The group last year requested its license for Corentyne to be extended so it could finish well-appraisal work while looking for partners willing to help finance the project’s development phase. But Guyana’s government said it saw no grounds for the extension.
In December, Frontera and CGX began seeking alternatives to resolve the dispute, opens new tab with Guyana over rights to retain the block. Should they fail to reach an agreement, the matter could go to an arbitration court, they said.
“The joint venture recently received a communication from the government of Guyana,” the companies said in a release.
“The government has taken the position that the license, together with the joint venture’s petroleum agreement with the government, has terminated and that, in the opinion of the government, there are no reasonable grounds to grant any extensions,” it added.
However, in the letter, Guyana gave the joint venture until February 22 to submit arguments that could lead to a reconsideration of the license cancellation, it said.
The license will cease to have effect on March 10, unless the representations are favorably considered by the government.
Guyana’s energy ministry did not immediately reply to a request for comment. The South American country’s Vice President Bharrat Jagdeo in December said the government was not worried about the possibility of taking the dispute to court.
Guyana’s oil industry is currently dominated by a consortium led by Exxon Mobil (XOM.N), opens new tab. The development of the Corentyne block had been seen as an attempt to diversify the country’s dependence on the U.S. major.
It is also the only area Frontera and CGX have left in Guyana after they returned two other blocks in recent years.
Frontera and CGX said the joint venture is “assessing all legal options available to it to assert its rights and will respond to the government.”
