Photo: Maersk Developer rig; Source: Maersk Drilling

Suriname shows potential to become next oil hot spot, GlobalData says

Recent exploratory success offshore Suriname, where several discoveries have been made in 2020, shows promise to become an oil production hot spot in the near to mid-term, according to GlobalData.

The energy data and analytics 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, comments: “Results from the four discovery wells drilled in Suriname so far have showed 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 neighbouring 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 expects that Suriname will reach a low breakeven price of around $40 per bbl.

Doh continues: “The anticipated low breakeven 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, breakeven price is expected to be considerably lower than US$40 per bbl”.

Further, 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 breakeven price to go down by just $5 per bbl, either initial capital expenditure needs to be reduced by at least 20 per cent, or well productivity needs to be 17 per cent higher”.

In a broader energy context, 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 explains: “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”.

Block 58 off Suriname - TotalEnergies
Block 58 off Suriname. Source: TotalEnergies

To remind, TotalEnergies and its partner Apache last year made three discoveries in waters offshore Suriname, Maka Central, Sapakara West, and Kwaskwasi announced in January, April, and July 2020, respectively.

In January 2021, the two companies made another oil and gas discovery, this time at the Keskesi East-1 well, located in Block 58 off the coast of Suriname.

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TotalEnergies then said it would start the appraisal operations designed to characterize the 2020 discoveries, while in parallel starting a second exploration campaign on this prolific block, in 2021.

Following the release of the Noble Sam Croft drillship after the completion of the Keskesi East well, TotalEnergies secured new rigs for further Suriname drilling. In November 2020, the Maersk Developer and Maersk Valiant rigs were selected for an exploration and appraisal project in Suriname’s Block 58.

Maersk Developer was expected to start operations in January 2021, while the Maersk Valiant was expected to begin operations in March 2021, with an estimated firm combined duration of 500 days.

Come May 2021 and TotalEnergies exercised an option to add the drilling of one additional appraisal well in Suriname’s Block 58 to the work scope of the Maersk Developer.

The contract extension for an estimated duration of 100 days was agreed upon, with work expected to start at the end of May 2021 in direct continuation of the rig’s previously agreed work scope.

The Maersk Developer rig was also used last year by Malaysia’s Petronas for the drilling of the Sloanea-1 exploration well located in Block 52 off Suriname. The well was announced as Petronas’ first discovery of hydrocarbon in Suriname in December 2020. Block 52, which covers an area of 4,749 km2, is situated within the prospective Suriname-Guyana basin.

In more recent news related to exploration efforts in Suriname, three oil companies – TotalEnergies, Qatar Petroleum, and Chevron – were revealed as winners in the country’s latest bidding round.

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The round was launched in November 2020 and the three oil companies submitted ‘most favourable’ bids for the relevant blocks offered in the Suriname Shallow Offshore (SHO) Bid Round 2020/​2021, which closed on 30 April.

Chevron filed the most favourable bid for Block 5 and a joint venture between TotalEnergies and Qatar Petroleum gave the best offers for Block 6 and Block 8.