TotalEnergies moving at full tilt to sanction giant oil project off Suriname by year-end

France’s energy giant TotalEnergies is going full steam ahead with its plans to take a final investment decision (FID) for a large oil project in Block 58 off the coast of Suriname by the end of 2024.

Following the appraisal of two main oil discoveries – Sapakara South and Krabdagu – in Block 58, combined recoverable resources of close to 700 million barrels in water depths between 100 and 1,000 meters were confirmed for the two fields last year. TotalEnergies is the operator of Block 58, with a 50% interest, alongside APA Corporation, which holds the remaining 50% stake.

The French energy giant’s development concept for the project entails a system of subsea wells connected to a floating production, storage, and offloading (FPSO) vessel, which will be situated 150 km offshore Suriname, with an oil production capacity of 200,000 barrels per day. This project is estimated to represent an investment of around $9 billion.

While the final investment decision is expected by the end of 2024, the first production is targeted for 2028. The production facilities will be designed for zero flaring, with the associated gas entirely reinjected into the reservoirs. The oil major intends to continue working closely with Staatsolie during the upcoming development and production phases to reinforce the actions in favor of local content.

During an investor presentation on February 7, Patrick Pouyanné, Chairman and Chief Executive Officer (CEO) of TotalEnergies, highlighted that Block 58 was an important project for the company and confirmed that work was underway to sanction it before the end of the year. The current inflation woes have led to cost increases and taking such costs into account is an important part of the FID process.

While responding to a question from a representative of an investment bank about price increases in drilling wells and other activities and possible effects on projects, Pouyanné explained that costs certainly matter while alternatives were being explored to absorb the effects of higher prices or consideration was being given to waiting for a more favorable moment to conclude contracts with suppliers.

Staatsolie, Suriname’s national oil company, sees no reason to deviate from TotalEnergies’ timeline for the development of the first offshore project in Suriname. The company explains that there are options to accelerate the development of the Block 58 project and factors that could lead to additional efforts to control project costs.

“It is still too early in the process to talk about a delay of the project. This will become apparent in the coming months from market research executed by TotalEnergies. If additional efforts are needed, there are still opportunities to account for any delays. Staatsolie’s experience is that TotalEnergies is doing everything possible to develop the Block 58 project as quickly as possible,” underscored Suriname’s national oil player.

Currently, both companies remain focused on executing the project according to the agreed timeline and achieving the first oil production in 2028. TotalEnergies has been present in Suriname since 2019 in Block 58, where five significant discoveries have been made, and is also exploring blocks 6 and 8 since 2023.

More exploration activities off the Suriname coast may be on the horizon, as Staatsolie inked production sharing contracts (PSCs) with Shell, TotalEnergies, QatarEnergy, and Petronas at the end of December 2023 for three offshore blocks.

In case of a commercial oil or gas discovery, Staatsolie has the right to participate in all three blocks with a maximum of 20% during the development stage.