March 27, 2001

Guyana, Suriname fight over untapped oil

                  GEORGETOWN, Guyana (AP) -- While high oil prices spur exploration for new
                  fields around the world, a potentially rich deposit off the marshy northeast coast
                  of South America remains untapped.

                  The largely unexplored zone is caught in a no-man's-land because Guyana and
                  Suriname can't agree on their maritime boundary. Guyana says the line runs
                  toward the north-northwest; Suriname says it runs more northward.

                  Last June, the two came close to war when Suriname enforced its line with two
                  gunboats, forcing a Canadian company's oil rig to withdraw from the disputed
                  area before it could drill under a license granted by Guyana.

                  The disagreement has prompted both countries to strengthen their small
                  militaries. And it is stalling oil exploration off the entire coasts of both nations,
                  which are among the region's poorest.

                  "This is one of the few areas left in the world that is underexplored and that has
                  perceived potential," said Newell Dennison, manager of the petroleum division of
                  Guyana's Geology and Mines Commission.

                  The U.S. Geological Survey estimates the entire coastal area off the two
                  countries -- called the Guyana-Suriname Basin -- could contain as much as 15
                  billion barrels of oil, or about 1 percent of the estimated world total.

                  Guyana, a former British colony, argues the line it claims simply follows the
                  historical marine boundary. "That's the line we inherited from the British, and
                  that's the line we've been using," Dennison said.

                  Suriname's position is equally firm. "We are not about to give it up," said Franco
                  Demon, Suriname's natural resources minister. "We do not dispute the area. It is
                  simply ours."

                  Both sides have expressed a willingness to settle the issue peacefully, but talks
                  broke down in July.

                  So far, only Guyana has granted oil exploration rights in the disputed area -- a
                  triangle of water that covers roughly 7,700 square miles (19,700 square
                  kilometers), running from near the mouth of the Courantyne River out to the
                  limit of the countries' territorial waters.

                  Guyana's foreign minister, Clement Rohee, said last week that negotiations had
                  been put on hold during campaigning for Guyana's national elections. His party
                  won a majority in parliament in the vote on March 19.

                  "I've been speaking to my colleague in Suriname on a one-on-one basis," Rohee
                  said. "We have to work on it."

                  If oil is eventually pumped from the region, it likely would have little effect on
                  world oil prices but would have a major impact on the region, said Charlie Sharp,
                  an oil analyst with the Canadian investment firm Canaccord Capital in London.

                  "The most is at stake for the people of Guyana and Suriname," he said. Until the
                  countries have worked out their differences, though, oil companies probably will
                  be hesitant to drill anywhere along their coasts, he said.

                  In the lead of the companies waiting to drill is a small Toronto-based firm, CGX
                  Energy Inc., which has secured exploration rights from Guyana's government
                  for a 5,970-square-mile (15,280-square-kilometer) area that runs along the coast
                  and includes some of the disputed zone.

                  Other companies with concessions granted by Guyana in the disputed area
                  include Exxon to the north and a joint venture involving ENI of Italy and Repsol
                  of Spain to the west.

                  CGX has invested more than $12 million to explore the area in the past two
                  years, and seismic surveys have suggested the possibility of huge oil deposits.
                  When the company's oil rig was evicted by Surinamese gunboats in June, CGX
                  drilled an exploratory well on another site outside the zone, but didn't find oil
                  there. Since then, there has been little coastal exploration for oil in the region.

                  Suriname's state oil company, Staatsolie, recently announced it will auction oil
                  rights to areas along the country's coast. But the two westernmost tracts --
                  located in the disputed area -- will not be included in the first round of bidding,
                  which is scheduled for November.

                  Guyana's government, meanwhile, has said it will build a navy to counter what it
                  calls Surinamese aggression. The country, which until recently had only small
                  coastal patrol boats, now plans to buy two used military ships from Britain and
                  to obtain three ships from the United States in exchange for pledging to
                  cooperate in anti-drug patrols.

                  Military leaders in Suriname, a former Dutch colony, say they plan to put most
                  of this year's roughly 400 military recruits into its navy.

                  "We have heard that Guyana is trying to build a navy," Defense Minister Ronald
                  Assen said earlier this year. "I do not think they want to fight Suriname, but we
                  are watching them closely."

                  Copyright 2001 The Associated Press.