After a flurry of oil discoveries in Suriname’s offshore waters since 2020, it was believed the impoverished former Dutch colony, among the poorest countries in South America, would shortly join neighboring Guyana to benefit from an oil boom of epic proportions. By 2022, those hopes were dashed by the decision of TotalEnergies and APA Corporation to delay the long-awaited multi-billion-dollar final investment decision, or FID, for 1.4-million-acre Block 58, where the partners have made five commercial oil discoveries. This dashed Paramaribo’s hopes of reviving a fragile economy suffering from a severe fiscal crisis that is boiling over into civil dissent. Since January 2023, there have been signs Suriname’s long-awaited nascent oil boom is back on track, especially with TotalEnergies CEO Patrick Pouyanne recently visiting the crisis-prone country to meet with President Chan Santokhi.
APA and 50% partner TotalEnergies announced their first discovery in Block 58 offshore Suriname in early 2020 after the Maka Central-1 well struck 240 feet of oil pay and 164 feet of light oil and gas condensate. That discovery was followed by four more discoveries in Block 58, the last being the February 2022 Krabdagu find.
Source: TotalEnergies 21 February 2022 Media Release.
Since 2021, when TotalEnergies took over as the operator of Block 58, there has been considerable success with appraisal drilling at those discoveries, with further oil resources being identified. In fact, as early as 2020, U.S. investment bank Morgan Stanely claimed that Block 58 contained at least 6.5 billion barrels of oil resources and shared the petroleum fairway that runs through the prolific Stabroek Block in offshore Guyana.
These developments sparked considerable optimism that TotalEnergies would proceed with a FID by as early as 2022, with first oil expected by as early as 2026, but that was not to occur. A mismatch between seismic data, drilling results and reservoir appraisals as well as a high gas to oil ratio sparked concern that exploiting Block 58 may not be as profitable as initially believed. TotalEnergies consternation is easy to understand with Suriname’s rising geopolitical uncertainty coupled with the stringent fiscal terms of the country’s production sharing contracts weighing heavily on the decision to make a multibillion-dollar investment. This sparked concern in Paramaribo where President Santokhi was desperate for oil revenues to start rolling in.
Since those worrying events, good news emerged for Suriname with APA and TotalEnergies reporting a slew of successful appraisal drilling and flow testing. Analysis of those results saw it estimated that there are exploitable oil resources of around 700 million barrels at the Sapakara and Krabdagu discoveries. In a somewhat surprising event TotalEnergies CEO Patrick Pouyanne visited Suriname earlier this month where he met with President Santokhi and executives of national oil company Staatsolie to discuss the future of Block 58. At the time of announcing his travel plans Pouyanne was quoted by Reuters as saying (TotalEnergies had identified an oilfield) “big enough to launch a sizeable deepwater development.”
On 13 September 2023, APA announced that development studies for Block 58 were launched with 700 million barrels of recoverable oil resources identified at the Sapakara and Krabdagu oil discoveries approximately 93 miles off Suriname’s coast. APA stated that will be sufficient to support the operations of a Floating Production, Storage and Offloading (FPSO) vessel with capacity of 200,000 barrels per day. The company flagged that detailed engineering studies will commence by the end of 2023 and the FID will be made before the end of 2024 with first production scheduled for 2028. The partners estimate it will take an investment of $9 billion to develop Block 58 and bring it to first oil, with such a massive investment alongside the considerable geological and geopolitical uncertainty explaining TotalEnergies earlier hesitation.
This finally sees Suriname embarking upon a long-awaited oil boom, reviving hopes of the former Dutch colony becoming a major regional oil producer. It was originally forecast that Suriname would be pumping 650,000 barrels of oil per day by 2030, but with the FID delayed to 2024, that likely will not occur until at least 2032. There are also discoveries outside of Block 58 to be considered, although work has not progressed beyond exploration activities at this time. These include the 2020 discovery at the Sloanea-1 exploration well in Block 52 offshore Suriname by Malaysia’s national oil company Petronas, which holds an operated 50% interest, and 50% partner Exxon. There is also the Baja-1 discovery in Block 53 offshore Suriname, adjacent to Block 58, by APA, the operator holding a 45% working interest, Petronas with a 30% stake and Cepsa controlling the remaining 25%.
Once production starts it will give Suriname’s economy a huge lift, as the oil boom in neighboring Guyana, which shares the Guyana-Suriname Basin, demonstrates. It was an Exxon-led consortium that discovered 11 billion barrels in the Stabroek Block offshore Guyana, which was brought to first oil in 2019. This sees the former British colony now pumping around 400,000 barrels per day, with Exxon developing four more projects which will bolster production to 1.3 million barrels per day by 2027. This considerable oil wealth saw Guyana emerge as the world’s fastest-growing economy during 2022, with gross domestic product expanding by a whopping 62.3%, with the IMF forecasting growth of 37.2% for 2023.
Guyana’s economic boom, which propelled the one-time deeply impoverished former British colony to be the second wealthiest country in South America on a GDP per capita basis, underscores the considerable windfall waiting for Suriname. Paramaribo is betting that with Block 58 progressing to production, it will lift Suriname out of poverty and head off the economic crisis currently engulfing the tiny South American country of less than 700,000. That crisis is so severe that annualized inflation topped 57% for July 2023, and annual 2023 GDP will only expand by a meager 2.3%.
By Matthew Smith for Oilprice.com
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