(Pietro D. Pitts, Energy Analytics Institute, 2.Jan.2025) — Staatsolie Maatschappij Suriname N.V. plans to participate in the $10.5bn GranMorgu project in Block 58 with up to a maximum of 20% interest. And, as part of this decision, Staatsolie looks to procure its estimated commitment to the project through a bond issuance and financing as well as another company contribution.
Current partners in GranMorgu, France’s TotalEnergies, with a 50% interest, and the US’ APA Corporation, with a 50%, agreed Staatsolie would contribute to the project from the 1 Oct. 2024 final investment decision (FID). Both partners also concurred Staatsolie would have to finalize its interest before Jun. 2025.
But, that $10.5bn GranMorgu FID doesn’t include the costs of inflation and unforeseen costs. Including these costs, the total investment is estimated at $13.2bn, according to Staatsolie estimations. And, based on the latter figure, Staatsolie will therefore have to contribute upwards to $2.6bn to the project.
Staatsolie is positive about its participation in GranMorgu owing to its “solid performance in recent years, a strong track record in financial management, and sustainable relationships with international, regional, and local banks, as well as local and regional investors,” the company said 30 Dec. 2024 in an official statement. This, despite the small country’s current economic challenges.
RELATED: TotalEnergies Takes $10.5bn FID for the GranMorgu Development on Block 58
Staatsolie plans to raise a portion of funds through the issuance of new bonds, while the other part will be financed through loans and/or partnerships and an own contribution (which has already been secured), the company said.
Importantly, Staatsolie looks to launch a bond issuance sometime in Jan. 2025.
GranMorgu means both “new dawn” and “Goliath grouper” in Sranan Tongo, the local Suriname language.
GranMorgu is located in the offshore Block 58 oil and gas field some 150km off the coast of Suriname. It holds recoverable reserves estimated at over 750 million barrels.
The project includes a 220,000 barrel per day (b/d) floating production storage and offloading (FPSO) unit, that replicates a proven and efficient design. First oil is expected to flow in 2028.
The appeal of Suriname: offshore and onshore
Suriname in great part is trying to follow in its neighbor’s footsteps. That neighbor is Guyana. There, the English-speaking country, which just started producing oil offshore in Dec. 1999, is riding a strong wave that combines rising oil production and robust economic growth.
Suriname and Guyana share the prolific offshore Guyana-Suriname Basin. And, according to data from a renowned US Geological Survey (USGS) in 2012, the Guyana-Suriname Basin had estimated F95 reserves of 5.167 billion bbls. That’s to say there was a 95% chance of at least the amount tabulated. Then, the basin also had estimated F50 reserves of 12.494 billion bbls and estimated F5 reserves of 25.981 billion bbls.
Hold that thought.
Fast forward to today and a 3-company consortium led by ExxonMobil Corporation that includes Hess Corporation and CNOOC in Guyana’s prolific Stabroek Block offshore have found estimated gross discovered recoverable resources of more than 11 billion bbls of oil equivalent. And, energy analysts covering Guyana say the final figure could easily be double that. Production there is expected to reach 1.3 MMb/d by 2030.
Will Suriname be a Guyana 2.0?
Well, it’s frankly too early to tell. But, that doesn’t take away from the importance of GranMorgu and other developments to follow. For what it’s worth, Block 58 couldn’t compete directly with Stabroek in a 1 v 1 scenario. That said, more Suriname offshore blocks would need to complement Block 58 to achieve what has been achieved to date in the lone Stabroek Block.
Guyana occupies an area of around 83,000 sq. miles, which puts it on par with the size of Great Britain. Narrowing in on Stabroek, located 120 miles offshore Guyana, it covers 6.6mn acres. That 1 block is equivalent in size to around 1,150 US Gulf of Mexico (GOM) blocks and contains multiple prospects and play types, Hess Corporation executives have said on a number of occasions in recent years.
For its part, Block 58, located adjacent to Stabroek on the Suriname side of the Guyana-Suriname maritime border, covers just 1.4mn acres, according to details revealed by APA Corporation.
Staatsolie, Suriname’s vertically integrated state-owned company was founded on 13 Dec. 1980. The experienced company—which will now try its luck in the deep water region—has laid a solid foundation for the further development of the Surinamese oil and gas industry under its core principle of “Confidence in our own abilities.”
Under Staatsolie’s vision of “Energizing a bright future for Suriname,” the company remains committed to ensuring “Suriname benefits maximally from the opportunities that have arisen offshore.”
Offshore Suriname, numerous companies have plans to continue with their exploration activities in their respective blocks. A total of 5 exploration wells have already been committed for 2025.
For its part, Staatsolie will continue to market the remaining unexplored offshore area to the oil and gas industry.
“A wealth of geological information is now available, while seismic and other geological surveys are underway. The aim is to contract as much of the offshore area as possible,” the company said in the 30 Dec. 2024 statement.
Staatsolie expects ongoing onshore projects and others that will start will help to maintain Suriname’s current oil production levels of around 16,500 b/d of oil. Importantly, all of that production comes from 3 onshore fields located in the Saramacca District. Suriname’s crude oil is denominated Saramacca Crude.
Plans to implement various exploration programs, including but not limited to the Coronie and the Uitkijk areas, could help Suriname find new onshore oil reserves, according to Staatsolie.
Suriname and power generation
Beyond Suriname’s upstream sector, Staatsolie is also involved in the country’s power sector. There, the company’s thermal power plant and a hydro-electric dam supply approximately 75% of Suriname’s electricity demand, according to details in the company’s most recent annual report.
Staatsolie plans to continue to increase the generating capacity of the Brokopondo hydroelectric power plant in 2025. The company looks to achieve this goal through the implementation of a multi-year program in which the turbines of 3 of the 6 generating units will be optimized.
In the green energy space, Staatsolie looks to continue to explore possibilities.
After obtaining approval from regulatory authorities, Staatsolie looks to start the construction of a solar power plant with a generating capacity of 30 megawatt-peak (MWp).
Suriname economy staged for upturn
Dutch-speaking Suriname is home to around 637,000 habitants (in 2023), according to International Monetary Fund (IMF) data.
Suriname is bordered by Guyana to its west and French Guiana to its east. Brazil, which boasts the largest land holding in South America, and which is also home to the largest population (around 212 million according to the IMF) in South America, neighbors Suriname to the south.
Suriname is a key exporter of aluminum goods, gold and hydrocarbons. In recent years the country’s economy has shown modest single-digit growth. Real gross domestic product (GDP) growth was around 2.1% in 2023 and 3% in 2024 and is expected to average around 3% again in 2025, according to the IMF.
This, as inflation, which was around 51.6% in 2023, fell to around 19.1% in 2024 and is expected to drop to around 13% in 2025, according to IMF preliminary estimates.
Suriname’s economy is expected to get a welcome initial uptick in 2028 when GranMorgu comes online and potentially higher upwards movements as the project ramps up production.
With regards the recent FID announcement for GranMorgu, IMF directors underscored in an official statement on 18 Dec. 2024, in an eighth review under the Extended Fund Facility (EFF) arrangement for Suriname, the critical importance of proper institutional frameworks to prudently manage the oil wealth.
Always fearful of the so-called Dutch Disease or the Resource Curse—that over reliance of a country on 1 main export industry at the expense others, which often results in an over reliance on imports of other products not produced domestically in sufficient supply—IMF officials expressed some suggestions to the Suriname government of president Chandrikapersad Santokhi.
One need not look further than Venezuela for a classic text example of the Resource Curse. Some cynics even say that small LNG exporting country off Venezuela’s coast suffers to some degree from the same curse.
The directors have urged Suriname authorities to promptly revamp the sovereign wealth fund and put in place strong and transparent fiscal rules, as well as to adhere to extractive industries transparent initiative (EITI) standards.
IMF directors also underscored the importance of institutional changes to increase the efficiency, transparency, and accountability of the energy sector.
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By Pietro D. Pitts reporting from Houston. © Energy Analytics Institute (EAI). All Rights Reserved.
