HomeNewsSuriname presses Exxon, TotalEnergies to combine gas developments

Suriname presses Exxon, TotalEnergies to combine gas developments

3/20/2024

(Reuters) - Suriname's state-owned oil company Staatsolie has begun talks with oil majors Exxon Mobil and TotalEnergies to encourage joint development of natural gas fields that straddle its and Guyana's maritime borders, the head of its state oil firm told Reuters late Tuesday.

The early-stage discussions are part of Suriname's efforts to increase foreign investment in its energy production and turn the South American nation into a regional gas hub. Its first major oil production from offshore is about four years away.

To Suriname's west, an Exxon-led consortium in Guyana has quickly ramped oil output to about 650,000 barrels per day (bpd). The group is in discussions with the Guyanese government to develop as-yet untapped gas fields. Guyana has said it wants the group to tap the fields for domestic supply and exports and generate a second stream of energy revenue for the country.

The Exxon consortium has outlined six projects in Guyana, where it has confirmed more than 11 billion barrels of recoverable resources, mainly for production of more lucrative crude oil. A seventh project could be the group's first to mainly focus on gas.

Two of Exxon's discoveries in Guyana, which contain mostly natural gas and gas condensate, are near two Suriname fields where TotalEnergies and APA Corp APA.O found gas, Staatsolie Managing Director Annand Jagesar said in an interview at the CERAWEeek energy conference in Houston.

"We've been talking to Total. They don't see an opportunity to make a feasible project as of yet from Maka and Kwaskwasi (two discoveries off its coast). Joining the Guyana and Suriname explorations, our projects, we can make that scale", Jagesar said.

Differences in taxation and other fiscal terms between the two countries are also among the challenges that must be addressed before any joint gas development can take place, he said.

Exxon and TotalEnergies spokespeople declined to comment.

GAS POWER

Even though the first project in Suriname scheduled to begin offshore output - TotalEnergies and APA's Block 58 - initially will be focused on oil, the country sees itself as a potential gas hub for the region.

"There is a golden lane," Jagesar said referring to a belt of offshore oil and gas reserves stretching from Brazil to Guyana and known as the Equatorial Margin. "The sweet spot is in Guyana, that's the best reservoir... It looks like we have more gas," Jagesar said.

TotalEnergies and APA aim to make a final investment decision on developing Block 58 later this year, with a goal of first oil output by 2028. But the project's planned $9 billion tag could rise as drilling costs have increased globally, Jagesar said.

"Two years ago, drilling costs were like $200,000 a day. Now it's like $400,000," he added.

The next project to inaugurate offshore output could be Block 52, where Malaysia's state oil firm Petronas PETR.KL and partner Exxon plan to further explore the area. They have arranged to drill an appraisal well and do production tests, Jagesar said.

Petronas could pursue a liquefied natural gas (LNG) project using Suriname's gas if discoveries allow. Petronas and Staatsolie have agreed to special fiscal terms through a contract addendum that will give the company a tax-free period of ten years from the start of production. Those negotiations could be extended to other companies, the executive said.

In shallow waters, Suriname has signed production sharing contracts with companies including U.S. oil major Chevron CVX.N and QatarEnergy for 16 blocks.

Following a new bidding round launched this year, the total of blocks allocated could be increase to 21-22, Jagesar said.

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