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Suriname Hopes To Become South-America’s Newest Oil Exporter


As Guyana prepares to become a major oil production nation the spotlight is firmly on the Guyana-Suriname Basin and the former British colony’s neighbor Suriname. After decades of poor drilling results, ExxonMobil’s slew of large high quality oil discoveries in Guyana’s offshore Stabroek Block has reignited interest in the Guyana-Suriname Basin’s oil potential. Suriname, which shares the basin estimated to hold up to 32.6 billion barrels of oil resources, is desperately seeking to replicate Guyana’s success after the COVID-19 pandemic hit its economy and government finances particularly hard. According to the International Monetary Fund, Suriname’s gross domestic product contracted by a massive 13.5% during 2020, the worst performance in South America after excluding Venezuela. 

The fallout from the pandemic is putting considerable pressure on an already cash strapped national government in Paramaribo. There are growing concerns that the deeply impoverished South American nation, which only late last year emerged from a long running political crisis, faces financial ruin. By late-March 2021, Suriname had skidded into default on its sovereign debt. The former Dutch colony’s government in Paramaribo failed to make a 31 March 2021 $50 million payment on $675 million of U.S. dollar denominated bonds due in 2023 and 2026. That caused international ratings agency Fitch to downgrade Suriname’s foreign currency issuer rating from C to RD, or restricted default, which is where according to the agency the issuer of the debt instrument has suffered an uncured default. According to Fitch that is Surname’s third default since the pandemic was declared in March 2020. Paramaribo has been negotiating with creditors for some time to delay payments, and earlier this month secured an agreement with around 90% of 2023 and 2026 bondholders to delay payments until July 30. Even more worrying is that Suriname’s economy despite being tipped to return to growth during 2021 will only expand by a paltry 0.7%, the worst forecast for South America after Venezuela. Those developments underscore Paramaribo’s precarious fiscal situation and why developing Suriname’s considerable oil potential is so important.

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In November 2020, the impoverished South American country’s state-controlled oil company and hydrocarbon regulator Staatsolie launched the 2020/21 offshore bid round with bids due by 30 April 2021. The round offered eight underexplored shallow offshore blocks south of deep-water Block 58 where Apache and 50% partner Total, which is now the operator, have made four significant oil discoveries since the start of 2020. Block 58 is situated adjacent to ExxonMobil’s prolific offshore Guyana Stabroek Block and thought to hold up to 6.5 billion barrels of oil equivalent resources, according to modeling by investment bank Morgan Stanley. Total, which has budgeted $800 million for exploration during 2021, is committed to developing Block 58, targeting up to nine wells this year and anticipates first oil from the block by 2025.

Source. Total, Results and Outlook February 2021.

Exxon along with 50% partner and operator Malaysian national oil company Petronas, discovered hydrocarbons with the Slonea-1 well in offshore Suriname Block 52. That discovery has yet to be fully evaluated but geological analysis shows that Block 52 sits in the fairway for hydrocarbon generation and further highlights Suriname’s considerable offshore petroleum potential. Toward the end of last month Petronas contracted geo-data specialist Fugro to conduct field work, including a seep survey and geochemical sweep in Block 48, to the north of Block 58, which is aimed at optimizing exploration activities.

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By late 2020 integrated energy supermajor Shell, which has a long history of operating in offshore Brazil, had entered the fray in Suriname agreeing to a farm down deal with oil explorer and producer Kosmos. Shell, for an initial cash payment of $95 million and contingent payments of up to $100 million, acquired a one third interest in Block 42 where Hess and Chevron each hold 33.3% and a 50% stake in Block 45 with Chevron owning the other half. That deal came after Kosmos failed to discover commercial quantities of hydrocarbons with the Pontoenoe-1 and Anapai-1A exploration wells drilled during 2018 in Blocks 42 and 45 respectively.

Source: Staatsolie.

Note: Kosmos interest in Blocks 42 and 45 is now controlled by Shell.

The latest dry hole, Tullow Oil’s much vaunted Goliathberg-Voltzberg North wildcat well drilled in Block 47 which only had minor oil shows, will not derail Suriname’s nascent oil boom. The crude oil discovered to date has been characterized as light with API gravities of 34 to 43 degrees and be relative low sulfur, meaning it is cheaper and easier to refine into high grade fuels. Importantly, in a world where peak oil demand is expected to crush petroleum prices, Suriname has some of the lowest forecast breakeven prices in South America. Analysts estimate the average breakeven price to be around $45 per barrel, which while higher than neighboring Guyana is lower than other jurisdictions in South America. The breakeven price will fall as more oil discoveries are made, the infrastructure required to support Suriname’s burgeoning offshore oil boom is built out and drilling technology as well as expertise improves.   


Paramaribo has established a regulatory framework which is favorable for energy companies, enhancing Suriname’s attractiveness as a location for foreign investment. It includes 30-year production sharing agreements, which are longer than in most other jurisdictions in Latin America, giving energy companies greater certainty and continuity of operations. Suriname also established a low royalty rate of 6.5%, which except for Guyana is significantly less than other countries in the region. This makes the former Dutch colony an attractive destination for foreign energy companies. If Suriname can replicate Guyana’s success, government revenues will swell once production begins in 2025 and ramps up from further oil discoveries and offshore assets developed. This could transform the former Dutch colony and take its 600,000 inhabitants out of poverty, if the oil boom is appropriately managed.

By Matthew Smith for Oilprice.com

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