Suriname: a rising star in oil and gas

Suriname

Suriname’s oil and gas sector is taking off at a dynamic time for the global energy industry, with a worldwide energy transition and wars in Ukraine and the Middle East hampering supply. As TotalEnergies prepares to sanction a USD 9-billion offshore project, the country’s policymakers are planning sustainable gains from a volatile sector.

Suriname has emerged in recent years as one of the most promising new oil and gas provinces worldwide. South America’s smallest nation by both size and population has recently seen major discoveries in its territorial waters, with Eni putting oil reserves at 124 million barrels as of end-2022 amid a continuing spate of discoveries.
Yet Suriname’s oil prospects will be shaped by major shifts in the global energy scene. The energy transition is moving finance away from hydrocarbons, posing a threat to relatively costly offshore developments in particular. There is significant pressure on new projects to reduce their carbon impact, potentially adding to costs.
Meanwhile, the war in Ukraine has prompted offtakers to turn away from Russia and seek new suppliers. And the 2023 Israel-Hamas conflict has the potential to grow into a regional war that the World Bank estimates could further disrupt supply and send oil prices to a record-setting USD 150 per barrel.

A CHANGING ENERGY INDUSTRY: As of today, Suriname’s oil production is dominated by state-owned Staatsolie’s onshore developments. The company currently produces 17,000 bopd, CEO Annand Jagesar told The Energy Year in a recent interview.
However, Suriname’s energy scene is poised for major changes following a series of commercial offshore oil discoveries made in late 2019 and 2020 by APA Corporation, TotalEnergies, Petronas, Tullow and Kosmos.
In 2021, authorities took a major step in licensing offshore blocks with the completion of the Shallow Offshore Bid Round 2020-2021. PSCs were signed with Chevron for offshore blocks 5 and 7, with Shell participating in Block 5. The assets are now under exploration.
The bid round also resulted in the May 2023 finalisation of a 30-year PSC for the two blocks’ neighbouring blocks 6 and 8, signed by Staatsolie with TotalEnergies and QatarEnergy and covering the exploration, development and production phases. Staatsolie retains a 40% share in the blocks through its subsidiary Paradise Oil Company. An initial exploration period will run for six years, with TotalEnergies and QatarEnergy covering exploration costs. For its part, Staatsolie has ensured new 3D-seismic data has been collected in the blocks, undertaking both the collection and analysis of the data.
In Q3 2022, the first oil discovery was made at the APA Corporation-operated Block 53 at the Baja-1 well. Drilled to 5,290 metres (17,356 feet) by the Noble Gerry de Souza, the well encountered 34 metres (112 feet) of net oil pay in a single interval. The Houston-headquartered player holds a 45% interest in the block, with Petronas holding a 30% working interest and CEPSA holding a 25% working interest. APA channelled a total of USD 46 million in upstream capital investment into Suriname in the first half of 2023.

BLOCK 58: Among Suriname’s oil and gas assets, offshore Block 58 has generated the most excitement. The block is being developed under a 2019 joint-venture agreement between partners TotalEnergies and APA, each holding 50%. TotalEnergies operates the block, and in September 2023 unveiled a USD 9-billion offshore drilling project at two sites that CEO Patrick Pouyanné says could contain 700 million barrels. The company is targeting production of 200,000 bopd, a game-changing volume more than 10 times Suriname’s current output. Development studies began in September and an FID on the project is expected by end-2024, with production to follow four years later in 2028.
A delineation period saw 14 wells drilled at the block, ending with the Krabdagu probe, completed in June 2022. August 2022 saw the completion of drilling on the Dikkop exploration well by the Maersk Valiant, which then moved to Sapakara field.
As of late 2023, at least two major players were vying for a key FPSO contract at the block: Modec and SBM Offshore were both reported by Upstream Online to have launched pre-FEED design studies. TotalEnergies has sought a vessel with 200,000 bopd processing capacity to produce from the joint development of the Sapakara and Krabdagu discoveries, which together are estimated to hold nearly 700 million barrels of crude. The project will take place in water depths of 100-1,000 metres.
“This development is in line with TotalEnergies’ strategy aiming at the development of low-cost, low-emissions oil resources, and leverages on our company’s expertise in deepwater projects,” Patrick Pouyanné, chairman and CEO of TotalEnergies, said during the announcement of the USD 9-billion plan.
For its part, APA has been eyeing blocks 53 and 58 as a potential “oil hub,” where the Baja discovery’s oil would flow into bordering Block 58 for processing.

DEMERARA’S PROSPECTS: A deepwater licensing round was opened in November 2022 and concluded in May 2023. The 2022-2023 Demerara Bid Round put on offer six blocks – 63, 64, 65, 66, 67 and 68 – in the northeastern section of Suriname’s offshore area on the Demerara Plateau. The blocks lie in water depths of 400-3,500 metres and hold 61 untested prospects and an estimated total resource potential of more than 41 billion barrels. Three of the blocks received qualified bids, according to Staatsolie, which was evaluating the bids as of June 2023.

STAATSOLIE’S KEY ROLE: Staatsolie Maatschappij Suriname was established in 1980 to ensure a strong national role in the country’s energy developments. Suriname follows the so-called Malaysian model, where a State company acts as both the national energy company and regulator, covering the responsibilities typically held by an energy ministry. Staatsolie describes its focal task as “to promote and contract the offshore areas after its own analyses.” It aims to keep as much acreage as possible under contract with international partners.
Staatsolie engages in oil and gas exploration and production, as well as the refining, marketing, transportation and sale of oil products. The company has produced heavy crude oil onshore in the district of Saramacca for 40 years. Its production chiefly takes place at the Tambaredjo, Calcutta and Tambaredjo-Northwest fields. This crude output is carried via a 55-kilometre pipeline to the 15,000-bpd Tout Lui Faut refinery, where it is processed into bitumen, premium diesel, premium petrol and fuel oil. Refined products are sold mainly in Suriname, but also to Caribbean markets.
Staatsolie is responsible for around 75% of Suriname’s power generation. The company operates a 96-MW thermal power plant through subsidiary Staatsolie Power Company Suriname. Part of its generated electricity and all of its process steam is used to power the Tout Lui Faut refinery. Since January 2020, the company has also operated the 180-MW Afobaka Dam.

LOW-CARBON PLANS: To make its coming hydrocarbons projects viable for financing, Suriname will need to ensure they feature strategies for decarbonisation. The country’s offshore reserves are expected to be produced with a carbon impact of around 15 kg of CO2 per barrel, Jagesar told The Energy Year, deeming the figure “relatively good compared to oil production elsewhere in the world.”
The government has banned continuous flaring, he said, “with most of the produced associated gas being reinjected and the remainder being used for energy generation needed for the offshore operations.” It also relies in part on the strict anti-flaring policies of the internationals planning to produce in its waters. TotalEnergies has committed to using the “best available technologies to minimise greenhouse gas emissions” at Block 58, saying facilities would be designed for zero flaring.
“In Suriname, we will need to make sure that we comply with internationally endorsed standards of oil and gas exploitation,” Minister of Foreign Affairs of Suriname the Honourable Albert Ramdin told The Energy Year. “We need to make sure that whatever oil and gas we exploit will be delivered with the highest environmental standards.”
“Suriname is already a carbon-negative country, and we have made a commitment internationally to remain carbon negative,” Minister Ramdin said. The sentiment was echoed by Jagesar: “Suriname is a carbon-negative country and intends to remain as such,” he said.

ECONOMIC TIDES TURNING: Suriname is considered an upper middle-income country, yet about a quarter of the population is estimated to live in poverty. Mining currently represents about half of government revenue, and gold makes up three-quarters of exports. Thus, the economy remains prone to commodity price shocks.
Following an economic contraction that began in 2015, Suriname’s GDP fell and unemployment and poverty grew. In late 2021, the government reached a three-year loan agreement with the IMF for a disbursement of around USD 700 million, conditional on fiscal discipline measures such as debt restructuring and improvements to governance. Following a programme review in August 2023, disbursements stood at only USD 212 million, but IMF officials hailed good progress on the measures, which it said were “starting to bear fruit.”
The government is now eyeing an inflow of revenues from Block 58, where production is expected to begin in 2028. In October 2023, officials announced an initiative to use future oil royalties as collateral for around USD 314 million of the country’s debt.

A COMING TRANSFORMATION: “Suriname is going through a challenging economic period,” President Chan Santokhi said in comments on TotalEnergies’ announcement of its USD 9-billion Block 58 plans. “This announcement provides the much-needed outlook towards positive developments for our nation,” he said. “We are confident that the Surinamese people will benefit from the economic spin-off that will be generated in the next phases.”
The government has been vocal about planning ahead for the effective use of revenues from the coming oil flows, with President Santokhi saying they would be directed to the country’s prosperity and stability fund and serve as “a means to diversify our economy by developing sustainable sectors such as agriculture and tourism.”
For his part, Jagesar highlighted that diverse economic sectors were already benefiting from the expansion of the industry, citing as an example the rise in demand for hospitality services as potential investors visit the country. “We are counting on good governance and on channelling our oil and gas income into sustainable sectors,” he said.
Another key element in Suriname’s plans for economic transformation is local content: ensuring oil and gas developments train local workers and direct spending to local suppliers and service providers. TotalEnergies has said it is working closely with Staatsolie to ensure a local content strategy is in place at Block 58. “These actions have already allowed the training of more than 80 people for logistic base operations in Paramaribo during the exploration and appraisal phases,” the company said in September.
A final fundamental aspect of Suriname’s plans for its oil wealth is an intention to fund a cleaner energy future. “Our vision for Suriname is to look at petroleum not as the endgame for our energy security, but as a transition to a sustainable energy mix,” Minister Ramdin said.

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