*

Government sees 'no reasonable grounds' to grant license

extension

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Joint venture has until Feb. 22 to submit arguments

Feb 11 (Reuters) - Guyana's government has given a CGX

Energy ( CGXEF ) and Frontera Energy ( FECCF ) joint venture a

30-day cancellation notice of its license to explore the

offshore Corentyne block, where it has found oil, the

Canada-based companies said on Tuesday.

The group last year requested its license for Corentyne to

be extended so it could finish well-appraisal work while looking

for partners willing to help finance the project's development

phase. But Guyana's government said it saw no grounds for the

extension.

In December, Frontera and CGX began seeking alternatives

to

resolve the dispute

with Guyana over rights to retain the block. Should they

fail to reach an agreement, the matter could go to an

arbitration court, they said.

"The joint venture recently received a communication

from the government of Guyana," the companies said in a release.

"The government has taken the position that the license,

together with the joint venture's petroleum agreement with the

government, has terminated and that, in the opinion of the

government, there are no reasonable grounds to grant any

extensions," it added.

However, in the letter, Guyana gave the joint venture until

February 22 to submit arguments that could lead to a

reconsideration of the license cancellation, it said.

The license will cease to have effect on March 10, unless

the representations are favorably considered by the government.

Guyana's energy ministry did not immediately reply to a

request for comment. The South American country's Vice President

Bharrat Jagdeo in December said the government was not worried

about the possibility of taking the dispute to court.

Guyana's oil industry is currently dominated by a consortium

led by Exxon Mobil ( XOM ). The development of the Corentyne

block had been seen as an attempt to diversify the country's

dependence on the U.S. major.

It is also the only area Frontera and CGX have left in

Guyana after they returned two other blocks in recent years.

Frontera and CGX said the joint venture is "assessing all

legal options available to it to assert its rights and will

respond to the government."