Suriname’s State Oil Company, Staatsolie Maatschappij Suriname N.V., is generating excitement and buzz in the oil industry, now that some offshore drilling is expanding after many months of deep-water exploration.
Next year, if predictions from geologists and sophisticated seismic studies are borne out, Suriname could be a major oil producer earning new dollars along with a number of partners, both private and state-owned oil companies. They came from every corner of the world to sign production-sharing agreements with Staatsolie.
Staatsolie has ten such agreements with companies both large and small: U.S. giant Chevron Corporation; Britain’s Tullow Oil; Spain’s Repsol S.A. and CEPSA; Japan’s Inpex Corporation; Malaysia’s Petronas; Murphy Oil Company of El Dorado, Arkansas; Dallas-based Kosmos Energy; and Houston-based Apache Corporation. Staatsolie has the option to participate in the development and production of commercially exploitable wells.
How much oil is out there?
In 2000, the United States Geological Survey estimated that up to 15 billion barrels of recoverable oil could lie beneath the coastal waters of Suriname and neighboring Guyana. And in 2011, an oil discovery in the waters off French Guiana was described as a potential “game changer” for the region’s oil-producing landscape.
For its part, Suriname already has an estimated 73.7 million barrels of onshore proven reserves. If the quest for an offshore “El Dorado” proves elusive, Suriname still will have plenty of oil for the development of its oil industry.
Staatsolie has been contemplating the possibility of a big offshore oil discovery for years. “The planned offshore drilling activity is part of Staatsolie’s long-term strategy for discovering new reserves,” noted Jim Hok, Minister of Natural Resources.
He explained, “There have been exploration drilling projects offshore in Suriname since the ’60s, ’70s and ’80s. The most recent activity were four offshore exploration wells drilled in the last seven years by three international oil companies under production-sharing contract arrangements with Staatsolie. The results of some wells were encouraging but there has not been a commercial discovery to date. “That said, expectations are high that there will be a game-changing discovery in the coming year.”
Besides oil exploration, Staatsolie has for years helped to make Suriname energy sufficient. Three of its land-based oil rigs pump about 16,500 barrels of heavy crude per day; and about half of that is processed at Staatsolie’s Tout Lui Faut refinery, and then sold in Suriname.
A 17-year-old facility, Tout Lui Faut refines about 7,350 barrels per day of diesel fuel, fuel oil, and asphalt bitumen, which is about half of the country’s needs. To increase that output, however, Staatsolie launched a major upgrade and expansion of the refinery a little over two-and-one-half years ago. The $760 million project is being handled by Italian contractor Saipem S.p.A.
Work will soon be completed and then production will be ramped up to 17,000 barrels per day, thereby keeping up with crude production and meeting most of Suriname’s needs. Also, the output of the new refinery will be more varied, producing diesel, various grades of fuel oil, bitumen asphalt, and other products. Staatsolie expects to meet 100 percent of Suriname’s diesel consumption; 70 percent of its gasoline consumption, and 100 percent of bitumen asphalt needs. Above all, the refinery will significantly decrease Suriname’s dependency on imported fuels, while adding $100 million annually to the government’s budget.
With the refinery online, Staatsolie also can ramp up the retailing of gasoline and diesel fuel, having three years ago acquired the retail outlets operated by Texaco and Chevron.
Staatsolie also provides “bunkering services” using specialized ships to transfer oil to visiting ships. The Port of Paramaribo is thought to have the potential to become a major international shipping hub. Consequently, the demand for services like bunkering are bound to grow with the port.
Staatsolie has come a long way since the government founded it in 1980. Back then it was a self-described “grass roots” operation. Now a mature and growing company, Staatsolie is involved in the exploration, drilling, and refining of crude oil.
Staatsolie produces about 25 percent of national revenues; and in 2013 that amounted to $284 million. Staatsolie’s taxes, however, can only pay for a fraction of Suriname’s ambitious development plans now being undertaken by the four-year-old government of President Desir Bouterse.
Oil is now one of the hot sectors in the resource-rich country. “This government has a socially motivated agenda that will invest in education, healthcare and housing,” noted Minister of Natural Resources Jim Hok.
Staatsolie, for its part, plays an important role in that vision. In 2013, it reported revenues of more than $1 billion; and for years it has been in a forward-looking investment mode. From 2009 to 2013, for instance, it carried out a $1.3 billion investment program. In March 2014, it announced that it had secured a $275 million loan for investments through 2018. This was the second mega loan Staatsolie had secured on the international capital market.
As Suriname has ramped up its oil industry, it has taken precautions to ensure that it retains its status as one of the world’s “greenest” countries, say officials. Much of the country is covered with pristine rainforests and rivers. Projects are thus carried out in accordance with strict environmental guidelines, rules and regulations, say officials. And to prepare for the possibility of offshore oil spills, a National Oils Spill Contingency Plan has been developed, operating under Suriname’s Director of National Security within the Office of the President.
• This article was produced in conjunction with The Washington Times International Advocacy Department.
Please read our comment policy before commenting.