Suriname, the Next Offshore Oil Hot Spot?

Offshore drilling in Guyana, mainly by ExxonMobil, has in the past years unearthed more than 9 billion barrels of oil equivalent, making Guyana a place to be when it comes to deepwater exploration, and as of December 2019, production, with multiple FPSOs planned for deployment in the coming years.

Explorers in nearby Suriname have been hoping to replicate Exxon's Guyana successes, and have recently to some degree succeeded, with Apache and Total (now TotalEnergies) announcing several discoveries in the past year, spurring analysts to label Suriname as the next oil production hot spot.

"Recent exploratory success offshore Suriname, where four discoveries have been made in [Block 58] in 2020, shows promise to become an oil production hot spot in the near to mid-term," energy intelligence group GlobalData said Monday.

The company noted that block operators TotalEnergies and Apache Corp awarded a contract for preliminary front-end engineering design in June 2021 for the manufacture of floating production and storage, with the first production scheduled to start as early as 2025.

Svetlana Doh, Upstream Oil&Gas Analyst at GlobalData, said: “Results from the four discovery wells drilled in Suriname so far have shown excellent oil properties, with API ranging from 27° to 37°. Type and fluid quality is close to the lighter oil produced in the Stabroek block of neighboring Guyana, where wells could reach high productivities of 11,000 barrels of crude oil per day (bd). Since both countries share the same geological trend of Guyana-Suriname basin, Suriname has huge potential for repeating Guyana’s oil exploration success.”

Taking Guyana projects as a reference, GlobalData said it expected that Suriname to reach a low break-even price of around $40 per bbl.

Doh continues: “The anticipated low break-even price is still slightly higher than in Guyana, where some projects go as low as $25 per bbl. However, if the development wells in Suriname confirm high productivities (at least 6,000bd) and the required infrastructure is built, the break-even price is expected to be considerably lower than US$40 per bbl.”

Also, GlobalData expects that the initial capital investment for an average project in Suriname could be between $6bn and $8bn, with recoverable reserves reaching around 600 million barrels of oil (mmbbl).

Doh adds: “For an average break-even price to go down by just $5 per bbl, either initial capital expenditure needs to be reduced by at least 20%, or well productivity need to 17% higher.”

In a broader energy context, GlobalData said, Suriname is also a good example of how oil and gas exploration in new offshore areas can remain on the menu of major companies.

Doh said: "Operators such as TotalEnergies have a very strong portfolio diversification strategy that includes renewable energy projects, but at the same time they retain hydrocarbon projects with high returns. As for Suriname, the country needs to move quickly to attract as much investment and incentivize more exploration so that potential resources are not stranded, as investors prefer cleaner energy developments and increasingly scrutinize over oil and gas projects."

TotalEnergies in May extended the contract with the Danish drilling contractor Maersk Drilling for the use of the Maersk Developer offshore drilling rig in Suriname.

The company exercised an option to add the drilling of one additional appraisal well in Suriname’s Block 58 to the work scope of the semi-submersible rig.

Suriname's Block 58 is where Total, with its partner Apache, in the past year struck several oil discoveries, using the Noble Sam Croft drillship, owned by Noble Corp. The contract for the Noble drillship expired earlier this year and the rig then moved to Guyana to drill for ExxonMobil.

TotalEnergies, which in January 2021 took over the operatorship of the Block 58 from Apache, had in the same month struck deals with Maersk Drilling for the charter of the deepwater rigs Maersk Valiant and Mærsk Developer. 

Elsewhere in Suriname, TotalEnergies last month confirmed it had with its partner Qatar Petroleum been awarded Block 6 and Block 8 in the Suriname SHO Bid Round 2020/2021.

TotalEnergies will operate the two shallow-water blocks, with depths between 30 meters and 50 meters, and located near the company's operated Block 58, where 4 significant discoveries have been made since January 2020 and where operations are continuing in 2021.

Article photo credit/Maersk Drilling

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