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Monday, Aug 2nd, 2021

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”.

Source: Offshore Energy | This text was excerpted from the media outlet cited on July 7, 2021 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.