(Oilprice.com, 18.Jan.2020) — The discovery of the Maka field in offshore Suriname will become one of the main upstream stories of 2020, bringing Suriname onto the international oil map, potentially spawning a new race for the Dutch-speaking country’s still unallotted license blocks and concurrently boosting the investment potential of Guyana (which will see the commissioning of Liza within a couple of months). The first-ever offshore discovery for Suriname, Apache and Total will make history in many ways. Herein below, we will take a brief look on the developments this discovery might bring about in and around Suriname – for the country itself, for its national oil company Staatsolie as well as for the companies involved in discovering the Maka field.
The Maka Central-1 well encountered 73 meters (240 feet) of oil pay and 50 meters (164 feet) of light oil and condensate pay in Upper Cretaceous-aged intervals. Given that the Haimara field in Exxon’s Stabroek Block is virtually across the border from the Maka find, one might speculate that the reserves of the new-found field will amount to a couple hundred million barrels of oil/condensate (somewhere around 200-300 MMbbls). The Maka discovery comes on the back of Total buying into Block 58 which was previously under full control of Apache, the operator of the block. Apache will drill the first three exploration wells and will transfer operatorship rights to Total thereafter.
What does it mean for Suriname?
Suriname, despite being a tad richer on average than neighboring Guyana, was sorely missing a success story like the Maka Central-1 discovery. Suriname has recovered somewhat from the economic slump of 2016-2017, with GDP per capita in current USD growing to 6230 in 2018, yet there remains a powerful downward drag for the nation’s reputation in the form of Desi Bouterse. Bouterse, convicted of drug smuggling and now also convicted of being responsible for the killing of 15 political opponents in 1982 in a case known as the December murders, a former army officer who ruled the country in the 1980s had made a spectacular comeback in 2010, winning the democratically held presidential elections.
Now Bouterse will most likely oversee the ramp-up of Suriname’s offshore oil sector. This is a double-edged sword for Suriname as it might save on government squabbling and internal feuds (Guyana is notoriously susceptible to this), yet simultaneously looms large on the drillers’ horizons. In 2020, it might be quite difficult to explain oneself why exactly they are cooperating with a politician convicted of drug smuggling and murder, with a ruthless history of human rights violations. If the chemistry works, Suriname might see blistering economic growth by the mid-2020s – if Guyana’s GDP is expected to grow 86 percent year-on-year in 2020, surely its success can be replicated by its immediate neighbor?
Luckily most of Suriname’s offshore blocks are apportioned – ExxonMobil, Kosmos, Petronas, Tullow and Statoil have all taken up operatorships. An Exxon-led consortium comprising also Statoil and Hess Energy has won Block 59, the license area abutting Guyana Caieteur block. But perhaps even more interestingly in terms of future potential discoveries, Kosmos Energy might see its market posture improve with Block 42, located right across the Canje block and still relatively close to Guyana’s Turbot/Longtail future production hub. It has to be noted that Suriname’s shallow water license areas (preliminarily labelled blocks A, B, C and D) are still unallotted and given that all wells drilled heretofore in a radius of some 150km from the coastline turned out to be dry, they will remain under Staatsolie for quite some time presumably.
What does it mean for Staatsolie?
Before the Apache-Total tandem announced their Maka discovery, the national oil company Staatsolie has made public its intent to substantially expand its presence on the bond market in 2020 and also (if conditions would allow) to list its shares either on the London or the New York stock market. This would serve the purpose of raising some 1-2 billion to fund the Surinamese NOC’s exploration drive for the upcoming years, with the company combining the double role of state oil company and oil regulator. The Maka discovery will make it easier for Staatsolie to do so as it alleviates concerns that the oil bounty in the Cretaceous plays of offshore Guyana does indeed extend into Suriname.
The Surinamese NOC will most probably need a substantial amount of money because if early indications are not misleading enough, Staatsolie will to try to avail itself of its back-in rights, effectively allowing it to buy into proven commercial discoveries (10 or 20 percent was mooted) without taking part in the exploration process. Given that Staatsolie currently operates the entirety of Suriname’s upstream sector – namely two onshore fields called Calcutta and Tambaredjo with a total output of 17kbpd – the NOC will be one of hottest chips on the stock market if it manages to use back-in options wisely so as not to antagonize oil majors who bring the know-how to the country’s offshore plays.
What does it mean for the drillers?
Apache Corp’s jumped 27 percent on the Maka discovery within one day – perhaps the optimistic reaction was also boosted by the speed with which ExxonMobil managed to launch Liza (roughly 5 years from discovery to commissioning), certainly an example to emulate. In accordance with the shareholder’s drilling schedule, Apache and Total proceeded this mid-January to the spudding of another exploration well, named Sapakara West-1 and located 20 kilometers to the southeast of Maka. Sapakara will also shed some more light on the quality to be expected in Suriname’s most attractive plays – the Guyanese Liza stands at 31-32 degrees API whilst Maka tended to tilt towards densities higher than 40 degrees.
In terms of political developments, domestic turmoils might slow down the pace of drilling but are unlikely to stop it – as recently as in 2017 the country saw a wave of protests on the back of IMF-suggested market reforms (cutting of fuel and electricity subsidies). Staatsolie seems genuinely interested in fostering Suriname’s oil sector, however it still needs to divest all its competences related to oversight of industry and following Guyana’s footsteps create a comprehensive oil and gas industry regulator. But luckily the license blocks themselves are far away from the hustle and bustle of Paramaribo – and Maka will certainly motivate all relevant stakeholders to speed up the development cycle on their respective allotments.
By Viktor Katona for Oilprice.com