CGX to begin drilling for oil in Guyana

The Canadian-based oil and gas exploration company, CGX Energy Inc, says a semi-submersible drilling rig is due to arrive by the end of this month as it begins the search for oil in Guyana's waters.

The drilling contract has been awarded to a subsidiary of the company, Diamond Offshore Drilling Inc, for the 'Ocean Saratoga semi-submersible drilling rig' to drill the Eagle-1 well on the company's fully owned and operated Corentyne prospecting licence offshore Guyana.

Diamond Offshore Drilling Inc owns and operates one of the largest fleets of offshore drilling units in the world, and has bases in the United States, Australia, Brazil and Scotland.

"We are pleased that the rig is now under tow and looking forward to the commencement of drilling." CGX said it will make a further announcement when the Eagle-1 well has commenced drilling.

Guyana had required CGX to drill the well by the end of 2011, but the rig the company had contracted was not available. The government said it granted the deferral to signal that there were "no issues regarding the sanctity of contract".

CGX holds three licences offshore Guyana, stretching 400 km from the Venezuelan border in the north to the Surinamese border in the south.

The United States Geological Survey had, in 2000, concluded that the Guyana-Suriname sedimentary basin contains 15 billion barrels of undiscovered oil.

Surinamese gunboats

CGX Resources Inc, a wholly owned subsidiary of CGX, had been granted a 10-year Corentyne Licence by the Guyana government in June 1998, but CGX attempt to drill at the Eagle location in 2000 was prevented by the Surinamese naval gunboats.

Suriname has insisted that the place the CGX had intended to drill was its territory and maintained this position despite a number of meetings held within the CARICOM grouping.

But in September 2007, the United Nations Law of the Sea ruled that the point at which CGX was exploring was well within the maritime boundaries of Guyana, paving the way for CGX's return.