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Two Majors Join Forces In The Next Great Oil Frontier

Apache Corp. and French Total have struck a deal to jointly explore for oil offshore Suriname. Each will have 50 percent in the venture, with Apache leading as operator of the first three exploration wells and then transferring the operatorship to the French supermajor, Reuters reports.

Apache had been conducting exploration work off the Suriname coast on its own, but results have been unsatisfactory. With a partner, it would now receive much-needed financial help, including $5 billion in cash carry for its first $7.5 billion of capital for appraisal and development of Block 58, as well as reimbursement of half of what it has spent on exploration in the area so far.

Suriname does not have a history as an oil producer, but it is a neighbor of Guyana, and Guyana has become the focus of attention recently after Exxon and Hess made a string of oil discoveries offshore the tiny South American nation. Reserves in one block alone—Stabroek—have been estimated at more than 5 billion barrels of crude.

Production from the Liza-1 well began last week, ahead of schedule, and should pump 120,000 bpd during its first phase of development. S&P Global Platts analysts estimate Guyana’s oil production at 160,000 bpd by 2023. Then, the second phase of development at Liza-1 will add another 180,000 to 200,000 bpd in new production.

Earlier this year, S&P Global Platts reported Guyana’s neighbor, Suriname, was also beginning to attract the attention of oil companies looking for new discoveries.

"The whole area appears to be characterized by excellent quality reservoirs," said Tullow Oil’s chief executive Paul McDade said in September, referring to the so-called Guyana-Suriname basin. In 2002, the U.S. Geological Survey estimated the oil resources in the basin at 12 billion barrels. It will conduct a new assessment in 2020.

By Irina Slav for Oilprice.com

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