TotalEnergies is launching development studies for what it called a "large oil project" offshore Suriname in the small South American country's Block 58, the French energy company said Sept. 13.
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The much-awaited announcement aims to produce oil from two major discoveries, Sapakara South and Krabdagu, whose appraisals were completed in August, TotalEnergies, the project's operator, said in a statement. The company said the appraisals drilled and tested three wells that hold combined confirmed resources of nearly 700 million barrels for the two fields.
The fields' reserves are in water depths between 100 and 1,000 meters (328 and 3,280 feet). They will be produced with subsea wells that will connect to a floating production storage and offloading unit capable of producing 200,000 b/d 93 miles off Suriname's coast.
The project represents an investment of roughly $9 billion, TotalEnergies said.
APA Corp., formerly known as Apache Corp., is a partner in the project; both it and TotalEnergies hold a 50% stake.
Final investment decision seen by the end of 2024
Detailed front-end engineering studies are planned to start by the end of 2023, and the project should get the final go-ahead by the end of 2024. First oil should begin flowing in 2028.
The project design will aim at zero flaring, with associated natural gas to be completely reinjected into the reservoirs.
Over 80 people are being, or have already been, trained for logistics base operations in Paramaribo during the exploration and appraisal stages.
TotalEnergies will work with Suriname national oil company Staatsolie to ensure that project contracts contain adequate local content awards.
"Block-58 development studies that we are launching today are a major step toward the development of the petroleum resources of Suriname," said Patrick Pouyanne, TotalEnergies chairman and CEO. "This development is in line with TotalEnergies' strategy aiming at the development of low-cost, low-emissions oil resources, and leverages on our company's expertise in deepwater projects."
Brings Suriname 'positive developments'
While Suriname is going through a "challenging" economic period, the announcement of the development studies "provides the much-needed outlook toward positive developments" for the country, Suriname President Chandrikapersad Santokhi said in a statement. "We are confident the Surinamese people will benefit from the economic spinoff that will be generated in the next phases," Santokhi said, adding, "Local entrepreneurs will have to seize the opportunities to provide their services and goods. We will make sure that future income from the offshore oil and gas will be spent wisely."
Staatsolie CEO Annand Jagesar said it took "huge efforts, great patience, and excellent partners to come to this long-awaited moment, adding, "We see the momentum, increased understanding of the basin, and diligent execution as key elements for further unlocking the Block 58 and Suriname basin potential in a responsible way."
RBC Capital Markets' Scott Hanold, who initially said the market was likely expecting more resources developed at a lower cost and that FPSO capacity was lower than expected, modified his remarks after speaking with APA.
Whereas TotalEnergies plans to develop 700 million barrels of resources, compared with APA's prior oil-in-place assessment of more than 800 million barrels, "we think APA's OIP is now biased higher, not lower," Hanold said. "TotalEnergies' production target of 200,000 b/d seems quite reasonable but, here again, there was some debate," among Hanold's investor sources, he said. "We have heard low estimates at 150,000-200,000 b/d and high estimates at 225,000-250,000 b/d. Accordingly, the partners' plan appears down the middle of the fairway."
And while the $9 billion projection initially appeared high, "the ranges were very wide at $7 [billion] to $13 billion," he added. "We think bias was more toward $8 [billion]-$9 billion, but that is generally in line."
Elsewhere in the region, the president of Guyana said Sept. 13 he was "not disappointed" by the meager turnout for bidding in the country's first-ever auction of offshore oil blocks Sept. 12, in which just six consortium bids were received for a total offering of 14 leases.
"Let us be very open and factual about this: We went out to auction at a time when major economies are saying to oil producers, we're not going to finance you," Mohammed Irfaan Ali said in a presentation at Inter-American Dialogue, a Washington-based international affairs think tank.
Getting a response was 'significant'
"Many companies recently have gone to auctions and got no action" from banks and financiers, Ali said. "We got a response ... [and] that is significant."
Guyana is one of the world's hottest crude exporters, with two producing oil developments, a third about to come online in October, and two others under construction. A development plan is being forged for a sixth project, which should be submitted to the government by year's end.
Bidders included a consortium of ExxonMobil Guyana Ltd., Hess New Ventures, and China's CNOOC Petroleum Guyana, Demerara Waves reporter Denis Chabrol wrote in an article Sept. 12. That trio is also partnered in Guyana's Staebroek block, on which 11 billion barrels of oil equivalent resources have been discovered so far in 32 major discoveries.
- SISPRO, a woman-owned Guyanese oil and gas company
- TotalEnergies, Qatar Energy International, and Petronas Overseas Ventures (Malaysia)
- Delcorp Inc. Guyana and Saudia Arabia-based Watad Energy and Arabian Drillers
- US-based Liberty Petroleum and Ghana-headquartered Cybele Energy
- International Group Investment and Montego Energy (London)
No details were immediately available on which of the 11 shallow or three deepwater areas the companies had bid on.