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Matthew Smith

Matthew Smith

Matthew Smith is Oilprice.com's Latin-America correspondent. Matthew is a veteran investor and investment management professional. He obtained a Master of Law degree and is currently located…

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Suriname’s Mega Oil Boom Is Back on Track

  • Suriname is attempting to develop its offshore oil reserves to become a major oil producer like Guyana.
  • Block 58 holds significant promise with estimated recoverable resources of 700 million barrels.
  • First oil production from Block 58 is expected in 2028, potentially transforming Suriname's economy.
Offshore Oil

A fiscal crisis, near economic collapse, and civil unrest have the government of Suriname, one of South America’s poorest countries, hungrily eyeing neighboring Guyana’s oil boom, which made that country the world’s fastest-growing economy. A spiraling cost of living and deep economic crisis sparked by the COVID-19 pandemic saw violent protests erupt at the start of 2023. These triggered further instability in the former Dutch colony which is struggling to regain its footing after a decade of despotic rule by military strongman Desi Bouterse ended in 2020. Suriname’s government, in the capital Paramaribo, believes the country’s territorial waters possess the hydrocarbon resources to support an oil boom on the scale of that being enjoyed by Guyana. This would not only resolve Suriname’s economic crisis but also lift the tiny country of less than 700,000 out of poverty.

Suriname currently pumps around 16,000 barrels per day from minor onshore operations, but the expectation is that recent offshore discoveries, when successfully exploited, will pump up to 200,000 barrels per day before the end of the decade. Way back in 2002, the tiny former Dutch colony opened its territorial waters to foreign energy investment, with foreign energy companies buying up shallow and deep water acreage. The considerable petroleum potential held by the Guyana Suriname Basin, which lies beneath the former Dutch colony’s territorial waters, has attracted considerable interest from Big Oil. 

Suriname Offshore Oil Blocks

It is for these reasons global energy supermajors TotalEnergies, Exxon and Chevron have emerged as key players in Suriname’s nascent oil boom. Despite a series of headwinds and subsequent delays Suriname, before the end of the decade, is slated to become South America’s newest oil producing country which will see it become a major petroleum exporter. 

The key for this to occur is the development of Block 58 offshore Suriname, which is controlled by TotalEnergies, the operator, and APA Corporation, both of which hold a 50% interest in the acreage. Five major oil discoveries have been made in Block 58 since early 2020. Despite concerns over gas-to-oil ratios and reservoir quality, which delayed the final investment decision, development of Block 58 is back on track. 

The block is adjacent to Exxon’s prolific Stabroek Block in offshore Guyana, where the supermajor has discovered 11 billion barrels of oil resources, leading to speculation that Block 58 contains similar petroleum potential. Indeed, U.S. investment bank Morgan Stanley in 2020 calculated that Block 58 could hold as much as 6.5 billion barrels of oil, making it a resource on a similar scale to the Stabroek Block.

After identifying a recoverable oil resource estimated to be 700 million barrels in size centered on the Sapakara and Krabdagu discoveries TotalEnergies and APA have started engineering studies for the development of a 200,000 barrel per day FPSO. The partners are targeting an FID before the end of 2024, with the project estimated to cost around $9 billion. Suriname’s state-controlled energy company, Staatsolie, is entitled to acquire a 20% share once the development is approved. It is anticipated that first oil will occur in 2028, with production forecast to reach 200,000 barrels per day within a year. This will deliver a substantial economic windfall for Suriname, a country laboring under double-digit inflation, which was 18.9% for May 2024, and weak economic growth with 2024 gross domestic product (GDP) forecast to expand by 3%.

Block 58 is not the only oil acreage capable of driving a major oil boom in Suriname. During the third quarter of 2022, APA discovered oil with the Baja-1 wildcat well in Block 53. The company owns a 45% interest in the block and is the operator, with Malaysia’s national oil company Petronas holding a 30% stake and Spain’s CEPSA holding the remaining 25%. The Baja-1 discovery is currently being evaluated with the APA-led consortium relinquishing most of Block 53, returning the acreage, except for the southwest portion encompassing the Baja-1 well, to state-controlled Staatsolie. The APA-led consortium made this decision because three other exploration wells drilled in the block were dry. Staatsolie plans to auction the relinquished acreage to other interested parties later this year if sufficient attention can be garnered from foreign energy companies.

Petronas, which is the operator, along with 50% partner Exxon has made three discoveries in Block 52 offshore Suriname. These are the Sloanea-1, Roystonea-1 and Fusaea-1 discoveries with the last being made in May 2024. The 2020 Slonea-1 discovery is currently being appraised with a second well being drilled. Industry consultancy Wood Mackenzie estimates that there are recoverable resources of around 400 million barrels held by the Roystonea-1 and Fusaea-1 discoveries. The consultancy believes Suriname’s total discovered recoverable oil resources total 2.4 billion barrels while recoverable natural gas resources exceed 12.5 trillion cubic feet.

Since 2020, nine deepwater oilfields have been identified in Suriname’s territorial waters. Those discoveries indicate Suriname’s territorial waters possess considerable petroleum potential on a scale that could rival neighboring Guyana. 

To date, no developments have been sanctioned, although despite recent delays concerning the development of Block 58 Suriname’s faltering oil boom appears back on track. While the first oil will not occur until 2028 at the earliest, there is every indication the tiny impoverished country of less than 700,00 is back on track to enjoy an epic oil boom. This will deliver an economic bonanza on the scale being enjoyed by neighboring Guyana, where 2023 GDP per capita hit $21,470 or nearly four times Suriname’s $5,890, which will raise the former Dutch colony out of poverty.

By Matthew Smith for Oilprice.com 

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