There is rising speculation the tiny South American country of Suriname will emerge as the next Guyana. After years of speculation surrounding the former Dutch colony’s petroleum potential, with discoveries in neighboring offshore Guyana pointing to the deeply impoverished country possessing billions of barrels of crude, the first oil recently took a big step closer. The joint partners in Suriname’s offshore Block 58, TotalEnergies and APA Corporation which both hold a 50% working interest, finally committed to a multi-billion investment to develop the petroleum acreage. This Paramaribo hopes will spark an epic economic boom, on the scale being enjoyed by neighboring Guyana, which will lift Suriname and its 623,000 inhabitants out of poverty.
It has been a rocky road for Suriname since the first world-class oil discovery was announced in offshore Block 58 at the beginning of January 2020. This discovery, along with four more world-class discoveries, buoyed speculation that Block 58 encompasses the same petroleum fairway passing through the prolific Stabroek Block in offshore Guyana, where Exxon has found over 11 billion barrels of crude oil.
Source: APA Corporation Second-Quarter 2024 Financial and Operational Supplement.
After those discoveries, various industry analysts heavily speculated on the amount of petroleum contained in Block 58, with some claiming that modelling indicates the acreage contains 6.5 billion barrels of crude oil.
Despite those incredibly positive developments Suriname’s oil boom almost ended before it began. By 2022, there was growing concern over reservoir quality, the rising volume of dry holes drilled and the high gas-to-oil ratio of some oil discoveries. That saw TotalEnergies, the operator of Block 58, delay making a multi-billion-dollar final investment decision until those issues were resolved. This delayed the first oil for Suriname, which had originally been slated for 2025, raising fears the former Dutch colony will miss the boat when it comes to enjoying a vast economic windfall from its petroleum resources.
Nonetheless, after what was an alarmingly lengthy delay, TotalEnergies declared during September 2023 it and partner APA were committing to developing a 200,000-barrel-per-day oil project in Block 58 with an FID to be made by the end of 2024. In recent news, TotalEnergies CEO and Chairman Patrick Pouyanné announced, while meeting with Suriname’s president Chandrikapersad Santokhi, that the company had made an FID committing $10.5 billion to developing Block 58. The French supermajor revealed the development of the GranMorgu project. GranMorgu means new dawn in the local English-based creole-language Sranan Tongo, which is spoken by around 80% of Suriname’s population. The operation will consist of a Floating Production Storage and Offloading (FPSO) vessel with the capacity to lift 220,000 barrels of crude oil per day from 16 production and 16 injection wells.
The GranMorgu development will exploit a petroleum resource estimated to contain more than 750 million barrels of crude oil encompassing the Krabdagu and Sapakara oil discoveries. Suriname’s national oil company and petroleum industry regulator Staatsolie has agreed to participate in the project. The state-controlled company must raise $1.8 billion as its contribution to the $10.5 billion investment to participate, but this will further bolster the share of income received by Paramaribo from the project, once it is operational.
GranMorgu Offshore Development Plan
All the natural gas produced will be reinjected to enhance recovery meaning there will be no flaring, bolstering the project’s environmental credentials at a time when Big Oil is under considerable pressure to reduce emissions. This, according to TotalEnergies, along with an all-electric configured FPSO, optimized power usage as well as water cooling and a permanent methane monitoring system will reduce emissions to below 16 kilograms of carbon per barrel of oil produced. First oil, from GranMorgu, is expected to occur in 2028 with production peaking during 2033 delivering a massive economic windfall for Suriname, even if low oil prices persist and the international Brent benchmark price falls to $60 per barrel.
Such a significant jump in petroleum production from around 16,000 barrels per day to over 200,000 barrels will give Suriname’s gross domestic product a healthy boost, particularly with production expected to expand further. If neighboring Guyana, where GDP nearly tripled between 2019, when production began, and the end of 2022, is any indication Suriname’s economy will receive a similar benefit after production commences in 2028.
Indeed, Paramaribo has established a favorable regulatory framework for offshore oil operations. The standard production sharing contract has a term of up to 30 years, which is among the longest in the upstream petroleum industry globally, and a 6.25% royalty applied to all oil production, which is quite low compared to many other jurisdictions. This creates a favorable operating environment for energy companies which is attracting considerable offshore investment in oil and gas.
Since 2015, Suriname’s petroleum regulator state oil company Staatsolie has signed production-sharing contracts for 16 offshore blocks. This includes Big Oil with Exxon, Chevron, Shell, TotalEnergies and Equinor all holding working interests in various blocks in offshore Suriname. The latest agreements were signed on September 2024 with Beijing-controlled PetroChina for offshore Blocks 14 and 15, which were part of Paramaribo’s shallow water offshore 2023 to 2024 bid rounds. Staatsolie, Suriname’s national oil company, retains a 30% participation interest in the two blocks.
Exploration activities, which proved unsuccessful, were previously undertaken in that shallow water acreage. The Maroni-1 wildcat well, which came up dry, was drilled in Block 14 during 1966 while in 1971 the Galibi-1 exploration well was drilled in Block 15, with it also failing to find commercially viable hydrocarbons.
There is considerable speculation that as more energy companies invest in offshore Suriname, production will expand despite the pressures being applied to the global petroleum sector by the push to significantly decrease carbon emissions. While Suriname’s nascent oil boom is years behind neighboring Guyana, there is rising speculation the sparsely populated country of 623,000 will be lifting 650,000 barrels per day by 2035. This along with expectations that Guyana will be pumping 1.7 million, or potentially more, barrels per day by that year will see the Guyana Suriname Basin emerge as a major driver of global petroleum production growth.