Guyana: Dreaming of oil

It is a thinly populated slice of Atlantic coast backed by a large tract of rainforest. But Guyana reckons it may have struck riches, thanks to a decision by a United Nations tribunal on September 20th. This awarded most of a disputed area of sea to Guyana rather than its neighbour, Suriname. “Think Kuwait,” dreamed an upbeat foreign diplomat.

Not quite, or at least not yet. But the United States Geological Survey reckons that the muddy waters of the Guyana-Suriname basin may hold more undiscovered oil than the proven reserves of the North Sea.
What has blocked exploration until now has been the confused borders left behind by former colonial powers. In 2000, a Surinamese gunboat threatened a rig hired by a small Canadian company, CGX Energy, halting its search for oil 160km (100 miles) offshore. When talks failed to find a compromise, Guyana referred the tiff to a tribunal whose verdict is binding under the UN Convention on the Law of the Sea.

News of the settlement saw CGX’s share price leap to $2.50, up from 26 cents a year ago. But though the geology is promising, nobody has yet found any oil. Kerry Sully, CGX’s president, is bullish but does not expect to drill before 2009.

The Economist