The growing oil boom in the offshore Guyana-Suriname Basin continues to gain pace. After making a series of spectacular discoveries in offshore Guyana energy supermajor ExxonMobil announced that with partner Malaysia’s Petronas it has made a promising discovery off Suriname. The discovery was made in offshore Suriname Block 52, which neighbors Block 58 where Apache has made a slew of hydrocarbon discoveries since the start of 2020. Petronas which owns a 50% interest in the block and is the operator, with Exxon owning the other half, made the find at the much-hyped Sloanea-1 exploration well. It was only in May 2020 when Exxon completed its purchase of a 50% interest in Block 52 from Petronas. The motivation for that investment decision is clear, the considerable potential held by offshore Suriname which shares the Guyana-Suriname Basin with its South American neighbor, and desire to replicate its success in the Stabroek Block.
The Malaysian state-controlled energy company announced:
“The Sloanea-1 exploration well encountered several hydrocarbon-bearing sandstone packages with good reservoir qualities in the Campanian section.”
This discovery comes on the back of three oil finds by international oil company Apache and partner French supermajor Total in the neighboring Block 58 which borders Exxon’s Stabroek asset. While Petronas and Exxon are yet to quantify and the size and quality of the discovery it is believed to possess considerable potential. That is further underscored by the three oil finds made by Apache at neighboring Block 58 since the start of 2020. Apache described those finds as light crude oil and condensates with API gravities between 34 and 60 degrees. This accords with Exxon’s oil assay for the neighboring Stabroek Block in offshore Guyana. Oil produced from the Liza oilfield, which is pumping up to 120,000 barrels daily and expected to reach 340,000 barrels by the end of 2022, has an API gravity of 32 degrees and sulfur content of 0.58%. While it is sourer than the oil produced in nearby Brazil’s offshore deep-water pre-salt oilfields it is still of a grade that is attractive to refiners, notably those in Asia which have been a key driver of the notable increase in demand for Brazilian crude oil.
Exxon also has a one-third interest in deep-water offshore Suriname Block 59 with the remaining two-thirds split evenly between Hess and Equinor. The energy supermajor acquired that interest in 2017 after its considerable success in offshore Guyana’s Stabroek Block. Block 59 is situated to the north of Apache’s Block 58 and shares a maritime boundary with Guyana and the Stabroek Block. Exxon is clearly seeking to replicate its success in Guyana. In fact, the global oil supermajor recently announced, because of the difficult operating environment, that it intended to focus for the near-term on high potential assets with significant long-term value. That includes, unsurprisingly, Exxon’s offshore Guyana operations which are estimated to have a low breakeven cost of $35 per barrel, significantly lower than many other jurisdictions in South America.
There is every indication that offshore Suriname possesses similar favorable characteristics, making it the next hot offshore drilling location globally. According to Baker Hughes, there were two active drilling rigs in Suriname at the end of November 2020, the highest number since December 2019, that will likely increase as Petronas and Apache ramp-up activity. Suriname’s improved political stability since two-time coup maker and convicted murder Desi Bouterse was replaced by the former justice minister and chief of police Chandrikapersad “Chan” Santokhi in July this year. This removed much of the political uncertainty surrounding Suriname’s electoral system and has allowed the government to focus on exploiting the considerable petroleum wealth held in Suriname’s part of the Guyana-Suriname Basin.
The oil potential is tremendous, as highlighted by the U.S. Geological Survey which estimated the Guyana-Suriname Basin holds up to 33 billion undiscovered barrels of oil. Chan Santokhi’s recently appointed government has embarked on a series of policy initiatives to attract investment and boost activity in Suriname’s oil patch. This saw the national oil company and industry regulator Staatsolie issue $150 million of bonds in early 2020 to fund its 2021 to 2027 investment program. The national oil company, in its role as industry regulator, announced the offshore 2021 bid round. There are eight shallow-water offshore blocks, located to the south of Apache’s Block 58, being offered with bids due by 30 April 2021. This represents a significant step forward for Suriname’s oil industry because shallow water assets were being controlled by Staatsolie as part of its offshore study area. The development of Suriname’s considerable offshore petroleum potential will be a boon for a deeply impoverished country that has been sharply impacted by the coronavirus pandemic. The IMF estimates the South American country’s economy will shrink 13% during 2020 compared to neighboring Guyana’s expanding 26% because of its growing oil boom.