Great interview with Chairman of BOD of CGX

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Great interview with Chairman of BOD of CGX

posted on Jun 10, 2012 07:24AM

Posted by Hymac on SH:

CGX Chairman says…

Written by Clifford Stanley

Saturday, 09 June 2012 23:40

CGX success integrally tied to Guyana’s success
IN AN exclusive interview with the Sunday Chronicle, Guyanese Dr. Suresh Narine, recently appointed Chairman of the Board of Directors of the Canadian oil and gas exploration company CGX Energy Inc., discussed his role as Chairman, the company’s plans as a corporate citizen, and its projections for exploration over the next two to three years. What does being the Chairman of the Board of Directors of CGX mean to you as a Guyanese?
I will admit that it is personally a very weighty position for me. It is weighty because decisions I can help make on the Board will have an impact on a country that is very dear to me. This is not like sitting on the Board of a country that makes lubricants, a purely profit-and-loss business. CGX and what it does is integrally linked to the hopes, aspirations and financial viability of my country. I wear many hats, there are many things that I do, but this one is the one that keeps me up most at nights.
This is so integrally linked to hopes and aspirations, and I would not have accepted it if I did not think I would be up to the challenge, because I realize how I will be judged.
But, on the other hand, I also feel very fortunate. I think I am fortunate to be injected into what will certainly be historically a very important turning point for this country; and I am trying very hard, even as I am involved in the activities of ensuring that we are poised to take care of it, I am trying to step out of that reality and develop the perspective to also be appreciative and to enjoy the fact that I am part of a movement of change.
To try to remember how we got there; to remember that I spoke to you. To remember every single little aspect of how we got there; how we bootstrap to get there, and who played a role, and how.
Do you foresee any conflicts of interest as a Guyanese and as Chairman of the Board of Directors of CGX?
One of the conditions under which I agreed to join the Board of Directors was that I would also chair the committee on health, safety and the environment. And indeed I now chair that committee. I recognise that I am in a very precarious position, in terms of my reputation, to represent the interests of a private company insofar as that interest ever collides with environmental safety or territorial safety, or the interests of Guyanese in general. I believe that future generations would judge me very harshly, so that’s why I took so long to decide whether or not I would join the Board of Directors. I have ensured that CGX understands that insofar as my public duties with the company do not jeopardise my sense of patriotism, then I would be willing to serve as a director. But I made it very clear that my first and foremost concern is to act as a responsible citizen for this country. They agreed that if ever there was to arise a conflict between Guyana and CGX, my position would be to step outside. (That) is why I will never directly negotiate with any government of the day on behalf of CGX. However, CGX is not in conflict with the government.
You know, many people don’t remember CGX’s role in the border dispute with Suriname? It would be crass of me to toot our own horn, but just do a little research and you will realise how crucial a role we played in backing Guyana in its bid to resolve its territorial integrity. Many people know that it took a lot of political gumption from the Guyanese government to resolve the dispute, but it took a lot of staying power from CGX as well.
Twenty per cent of the Board of Directors of CGX is Guyanese. CGX operates like a Guyanese company, and as long as I am Chairman of the Board, or continue to be influential on the Board, it will continue to do so with the best interests of Guyana at heart.
You have emphasised that CGX is very serious about its social responsibilities, and that the trajectory of related activities undertaken since the company commenced operations here will not be allowed to wane. What can Guyanese look forward to from CGX in this regard?
Another one of my conditions for joining the Board of CGX (the second and last one, actually) was that they had to explain to me what their social responsibility, vision, plan and commitment was to Guyana. They committed to me that I would chair the committee to put together that plan, and I indeed now chair that committee.
So we did the Dookie Hall of Fame under Social Responsibility. We have a comprehensive plan on our social impact portfolio, and are working very closely with the Canadian High Commission with an intent to partnering with CIDA.
This will relate mainly to education of Guyanese, enablement of training, support for the standards and regulations, and some poverty alleviation-type activities, but not just grants.
We have made an outreach with the companies in the extractive sector to partner with us, and we have also approached the larger oil and gas companies that are operating here, like REPSOL, to partner with us in our social outreach agenda. We see ourselves as setting the vision, demonstrating our commitment, and then bringing others on board with that vision.
So, one example is to work with a women’s group. We have identified some that work on, say, agriculture. The idea will be to inject funds for technology to be added to their activities to make it more lucrative, and more quality controlled, and more efficient; but it is not to give the funds to them.
They have to pay back, so that, that goes into a revolving fund which is used to fund another group, so that it is perpetuated, as opposed to just granted out. So it will be very similar to a micro loan scheme, except that there is not interest involved.
Apart from this, we will partner with NGOs and government; with people that are already working on these types of programmes, eg: the mangroves restoration people, and with government programmes such as the technical institute, the Guyana Geology and Mines Commission (GGMC) Mining School, etc!
We will partner where there already exists momentum, critical mass, and scrutiny, so that we are guaranteed that whatever we inject is effective, and that we don’t have to drive an agenda, but we support an already existing agenda.
For example, too, we have a significant issue in setting up very quickly standards and regulations, which are very important.
Guyana may have welders who are good welders but have not been accredited by international standards and regulations. So now, if you have a rig that comes in, that rig has insurance requirements. So they are not going to let our welders on board unless they meet the accreditation standards approved and required by their insurance.
So we very quickly need to get our standards and regulations up to speed, to be accepted by the international insurance. So I think that we have an uphill battle, and CGX will play its role in helping that process along; but we are not going to be the driver.
Guyanese will decide where they want to go, and as a good corporate citizen, we will give support.
You have also said that CGX will move to sensitise Guyanese about what skills it needs, so that they can access some of the benefits of the industry, even at the exploratory stage. Can you elaborate on this?
Yes. One of the things CGX will be doing, from next month actually, is holding monthly seminars to talk about what skills we need in the industry: from supply boats to land operators, to expediting, to welding, to typing, to security, to transportation.
We will be dealing with each sector on a monthly basis.
We are seeking to work with that Ministry of Natural Resources and Environment; with the Ministry of Labour, (and) the Ministry of Education in getting that message out about what it is that we need.
What we need for our next well, for our on-shore operations; what we do need for our ship operations, skills wise and business wise.
So that the idea is that if we have been using a foreign company in the past, we want the local industry to understand what the needs are; and even if the local industries are not set up to totally provide what we need, there is an opportunity for them to partner with the same foreign companies that we would have wholly sub-contracted to in the first place.
The result will be that we will get more of an engagement of a local nature with those companies, and bootsrap the whole thing up.
This is an important part of social outreach as well.
We encourage this. From 2000 to now, we have drilled five wells, three onshore and two offshore. Every single well we have drilled we can show you the chart that the amount of local people sub-contracted have grown. But it is still not high enough.
This morning I was meeting with the College of the North Atlantic and Marine Institute from Newfoundland, Canada and it is by collaborating with people like that, and business and communities in Canada and neighbouring Trinidad, we can bootstrap ourselves that way as well. This is not going to happen overnight. It is a lot of hard work, but is important hard work, or Guyanese will not be able to engage in a very lucrative industry.
You recently allowed Pacific Rubiales Energy (PRE) Corporation to increase their shares in CGX from 18.8% to 36%. How significant is this development in terms of your future plans?
PRE is a very successful company. They have one of the most effective technical teams in terms of geophysics and in terms of production. They are very successful at injecting technology into their plans. They have used cutting edge technology, for example, to make fields that are not normally lucrative to become high paying fields. They are very good technically, and they are a very wealthy company. So we had an option: When we realised that we were overspent and that we had commitments to Jaguar, we knew we had to raise some money in the short term. We could have chosen a number of directions in which to go. We could have done a number of private placements for equity. We could have done a joint venture with an option. We could have allowed them to take more equity. But we made a strategic decision to go with them mainly because they understand the geology of this basin very well. They are an amazing production company, and because they were already a large shareholder, we had gotten to know them very well, and we felt comfortable working with them. So it was a win-win-win all the way around.
So we have this partner who is technically clever and knows how to do production, and it’s a win for Guyana because the company that has drilled most wells in Guyana is us. We are much stronger with PRE at our side.
What can we expect to see from CGX in the next three to five years?
Well CGX has stated that the success of the company is integrally tied to the success of Guyana. I suppose because it has a Guyanese founder as well. It only operates in this Basin. Its sole reason for being is to find oil and gas in this basin, and so it is not like another company that could have bad relationships with one country because it is operating in fifteen other countries. CGX went through a period of cost overrun. We had to go back and get financing, and I was very pleased to be the head of a team where everybody just clicked into place. Everybody according to their qualifications and expertise just clicked into their jobs, and we got it done as a team. We are coming out into the next wave of activity very, very strong as a company. Our very next activity, even as we wait for results to come from Jaguar (and we are very, very hopeful about Jaguar); even as we wait, we are planning the next well. If Jaguar comes in wildly successful, we are still going forward to drill Eagle Deep. Operationally, the entire company is focused on that. We have a work plan which details five to six wells over the next three to four years, as well as 2D and 3D seismic in all our licences to ensure that we are drilling in the right place. So it is not just drilling wells, it is expending millions of dollars on 2D and 3D seismic activities in our licences. As a company, we are not disappearing. Even if we get a huge discovery at Jaguar, our intention is to keep pushing, because this basin is one of the most lucrative basins that exist. It’s the last frontier. All around us, we have finds: French Guiana, Brazil, Trinidad; and then when you look at the geology of this basin, it was connected to West Africa, and you look on the West African side, Ghana, Papua New Guinea are all producers; and when you look at the geology, it is identical. We are very excited about this.
Importantly, too, we can now do joint ventures. We haven’t closed the doors on JVs. It doesn’t mean that PRE is the only company we will be working with. We will JV with larger companies, and we have a number of people in our data room right now looking at our seismic data. We are very open to JVing with large- and medium-sized companies. You will probably see us announcing a number of JVs in the near future. (END)