Suriname-Guyana marine settlement sparks oil rush

GEORGETOWN, Guyana, September 28, 2007 – Late last Thursday afternoon a United Nations court settled once and for all a simmering maritime border row between two of the smallest nations in South America, opening the way for international companies to exploit suspected vast oil and gas resources below the sea.

In a unanimous vote, the five-judge panel from the Arbitral Tribunal under the Law of the Sea Convention decided to split thousands of square kilometres of offshore blocs largely on the principle of “equidistance”, but in doing so, it took away a large tract of water that Suriname had claimed as its own for decades from neighbouring Guyana.

“The boundary for the most part follows the equidistance line between Guyana and Suriname,” said the tribunal, based in Hamburg.

The governments of both countries expressed satisfaction with the binding ruling, which resulted from a February 2004 appeal to the tribunal by Guyana after it became clear that bilateral and multilateral efforts to settle the dispute had failed miserably.

In June 2000, Suriname’s Ronald Venetiaan administration sent gunboats to expel a rig that was drilling in the disputed area. The rig was leased by Toronto-based CGX Energy Inc, one of the world’s tiniest oil companies, on a concession award granted by Guyana.

The incident brought the two finance-starved former European colonies very close to war, with both massing troops on their borders and allowing military aircraft to over-fly each other’s airspace in a near farcical show of force by two armies with a combined total of no more than 5,000 troops and with less than a dozen planes and vessels under their command.

Leaders of Caricom, the 15-nation trade bloc of which both are members, held five rounds talks in five different countries. Confident Surinamese leaders refused Guyanese offers to share production rather than have the resources that lie beneath the seabed remain untapped by anyone.

So it is no accident that both Venetiaan and Guyanese President Bharrat Jagdeo expressed great relief that that the proverbial albatross had been lifted from their necks.

“The resolution of this dispute, which is now final and binding on the parties, will allow Guyana and Suriname to put this controversy behind them and to proceed to cooperate as good neighbours,” Jagdeo said. In Paramaribo, Venetiaan said his government “is delighted and relieved that the maritime dispute with Guyana has been settled.”

Both also said that international oil companies that had been mobilising for just this moment will be flocking to their capitals now that there are no more worries about hostile gunboats moving in on their investment, as was the case in 2000.

Critics, Caricom experts especially, had noted that the intransigence displayed by Suriname and the failure of the two to reach a bilateral deal have cost them billions in revenues as oil prices continue to soar. No more time should be wasted as their economic fortunes could turn around dramatically in the coming months.

Under the ruling, Guyana, South America’s only English-speaking country, gets the greater share of the Guyana-Suriname Basin, netting 33,152 square kilometres of waters off its coast, while Suriname, the continent’s only Dutch-speaking nation, gets 17,871 square kilometres.

Shares of CGX, which closed at 1.58 dollars on Wednesday, are expected to climb, especially as the company has not been shy to quote from a U.S. Geological Survey (USGS) study estimating that the basin is one of the largest virgin areas of its kind on the globe, with recoverable oil reserves of about 15 billion barrels and 1.19 trillion cubic metres of gas.

CGX apart, there are also Spanish-Argentine-owned Repsol YPF, Exxon-Mobil and other companies lining up to drill in the basin.

However, there are still two separate border rows between Guyana and Suriname that did not attract the attention of the tribunal.

The most serious has to do with a colonial-era convention that grants Suriname rights to the entire border along the Corentyne River. The second concerns the New River Triangle on the Guyana side that Suriname, a country of 480,000, has perennially claimed as its own. In 1969, Guyanese troops expelled Surinamese soldiers and civilians occupying the harsh, rugged highland area and continue to occupy it to this day.

Surinamese nationalists have never hidden their hurt at the loss of that mini-war, in which only a few bullets were fired and no one killed. So when the gunboats moved in on the rig on Jun. 3, 2000, it was sweet revenge and payback for the Surinamese military, whose officers had been forced to endure years of teasing and ribbing at the hands of their Guyanese colleagues.

Rudy Insanally, Guyana’s foreign minister, says that Thursday’s ruling “will certainly ease tensions and lead to better relations with our neighbour”, but added that the main effort was to get the offshore row settled first.

“We will most certainly have to look at the other problems but right now we are just dealing with one issue at a time, just one. This ruling will be of great economic value to both our countries,” he said.

While governments and investors digest the ruling, the happiest of them all seems to be CGX, which said that its main drill target hole, codenamed Eagle, has been found to be 15 kilometres inside the new award area.

“The past seven years have been very rough but we look forward to the next seven with great optimism. The political uncertainty is over and you are going to see a lot of activity on both sides of the border. That is certain,” said CGX president Kerry Sully.

Suriname is already an oil producer, having found resources on land while drilling for oil nearly 40 years ago. CGX drilled three onshore dry holes on the Guyana side in the last two years in a move to emulate drillers across the river. Suriname is currently improving its refining capacity and works closely with Trinidad in that area. Happy times are ahead for both, analysts say.  (IPS)