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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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Could Suriname Become The Next Oil Hotspot In Latin America?

  • Suriname is hoping to replicate the hydrocarbon success being enjoyed by neighboring Guyana.
  • The country’s vast hydrocarbon potential could be a boon to its struggling economy. 
  • While Suriname’s offshore petroleum blocks are still in the early exploration phase, it is already drawing the attention of oil majors like TotalEnergies and Shell.

The deeply impoverished South American country of Suriname, which has been sharply impacted by the COVID-19 pandemic, is hoping to replicate the hydrocarbon success being enjoyed by neighboring Guyana. While Suriname’s economy shrank by 16% during 2020 because of the fallout from the pandemic, Guyana’s gross domestic product soared by a massive 43.5% and the unwelcome news does not stop there. For 2021, the former Dutch colony’s GDP is only expected, by the IMF, to expand by a paltry 0.7%, likely the worst performance in South America, whereas Guyana’s will surge by over 20%. This is fueling the push by Suriname’s national government in Paramaribo to capitalize on the considerable hydrocarbon potential of its offshore oil basin, the Guyana-Suriname Basin, which it shares with Guyana. According to the U.S: Geological Survey the Guyana-Suriname Basin could hold up to 32.6 billion barrels of undiscovered oil resources, underscoring the tremendous hydrocarbon potential that the countries share. That is further highlighted by the spate of oil discoveries made by ExxonMobil and its partners in Guyana’s offshore Stabroek Block, where the global energy supermajor estimates that it has found 10 billion barrels of recoverable oil resources. Exxon along with Malaysia’s national oil company Petronas during late-2020 discovered oil in Block 52 offshore Suriname. Apache and 50% partner TotalEnergies, which is the operator, have made five commercial quality oil discoveries in the 1.4 million acres Block 58, which is contiguous to Exxon’s prolific Stabroek Block.

Apache
Source: Apache September 2021 Investor Update.

Those finds are characterized as medium to light low sulfur content crude oil. It is believed that Block 58 sits on the same petroleum fairway as the Stabroek Block, which is supported by recent drilling results. Then in early November 2021 TotalEnergies made another discovery in Block 58 at the BonBoni-1 well, although that was judged to be non-economic to exploit. The find consisted of black oil with an API gravity of 25°, making it a less popular heavy crude variety, which despite having a low gas to oil ratio or GOR was deemed to be too small to justify commercial production. 

As a result, TotalEnergies and Apache will cap the well and pursue their exploration program for Blocks 58 and 53 which both neighbor Block 52 where Exxon and Petronas found oil last year. This activity includes drilling the Krabdagu exploration prospect n Block 58 18 kilometers south of the Sapakara south oil discovery. The location, according to Apache, shares similar geological characteristics to the two successful Sapakara wells and the nearby Keskesi oil discovery, boding well for yet another oil discovery. In early 2022, TotalEnergies plans to spud the first exploration well in Block 53 with the Noble drillship Gerry de Souza, with which the French supermajor has an option to drill two additional wells in the block.

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It is estimated that Suriname’s offshore oil discoveries currently hold recoverable oil resources of nearly 2 billion barrels. Those recoverable resources will keep growing as major energy companies continue to invest in offshore Suriname and engage in further exploration as well as development activity. The South American country’s national oil company Staatsolie completed a shallow-water oil auction for eight blocks earlier this year. While the offshore shallow water 2020/21 bid round attracted significantly less interest than originally anticipated, with less than half of the eight blocks on offer garnering bids, three were awarded to international energy supermajors. Chevron was allocated Block 5 while Blocks 6 and 8 were granted to a consortium composed of TotalEnergies (40%), Staatsolie (40%), and Qatar Petroleum (20%). The shallow water blocks, located near the border with Guyana and below Block 58, are thought to hold considerable hydrocarbon potential, although there is an exploration phase of six years meaning it will be sometime before that can be quantified.

While Suriname’s offshore petroleum blocks are still in the early exploration stage TotalEnergies anticipates pumping first oil from Block 58 in 2025. That block is to become the primary driver of Suriname’s oil boom with the impoverished Dutch colony expected to be pumping 650,0009 barrels per day by 2030. If recoverable crude oil resources in offshore Suriname prove to be as immense as Guyana’s offshore Stabroek Block, which is likely for the reasons discussed, the impoverished South American country could potentially be pumping 1 million barrels or more per day by the end of the decade. Due to a lack of access to resources and a weak fiscal position Suriname’s economy is struggling to recover from the pandemic. The emergence of an oil boom in the tiny, deeply impoverished South American country will trigger a major economic expansion, likely commensurate to that which is currently occurring in neighboring Guyana. Those factors create a considerable incentive for Paramaribo to ensure it maintains a transparent regulatory and operating environment that is attractive to foreign energy companies, to generate the investment required to sustain Suriname’s nascent oil boom.

By Matthew Smith for Oilprice.com

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