Suriname prepared for oil 6 years before first find in offshore basin – Guyana still struggles six years later

Feb 08, 2021 News

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By Mikaila Prince

Kaieteur News-It is clear that the Republic of Suriname took those cautionary words very seriously, seeing as the Dutch-speaking country began preparing its people for the challenges that come with an oil and gas sector. This was six years before it had even struck black gold in its offshore basin. And by developing and strengthening its capacity ahead of time, Suriname was not only able to capitalize from the looming revenues, but take full control of its lucrative sector – unlike Guyana.

Chief Executive Officer (CEO) and Managing Director of Suriname’s Staatsolie, Rudolf Elias, had made the foregoing revelations last Thursday, during his debut appearance on Kaieteur Radio’s Guyana’s Oil & You.

Hosted by Senior Journalist Kiana Wilburg, a question was posed to Elias regarding how Suriname was able to get ready for the considerable resources discovered in 2020.

To this, Elias revealed a three-part, strategic plan, which first came with preparing Suriname’s National Oil Company (NOC), Staatsolie. Elias recalled on the virtual interview that six years ago when he became the CEO of Staatsolie, he was positive that his country would discover oil, and rather than waiting until that discovery would happen, he initiated the first steps of preparing the 40-year-old Staatsolie for the discoveries that would follow.

“Staatsolie is prepared,” he expressed, “We are prepared. We can go to the capital markets. We are the partner of choice. Everything with us is ready to make that big step to develop and to be the partner of choice.”

The CEO revealed that the second box Suriname had to check off was that of preparing the local business community. He recalled that almost five years ago, Suriname had contracted a consultancy firm, aimed at conducting an assessment of 260 Surinamese companies that could offer services in the development and operational phases in the oil sector.

When that assessment was completed and the report was handed over to the government, NOC, and local companies, Staatsolie had realized that these local businesses had to work on polishing up some areas.

The CEO explained, “We said to them, ‘You have to work on these three or these four or these seven items. This is where you are and this is where you have to come in order to prequalify later when you want to do this international.”

This had not only prepared the Surinamese businesses for the sector, but made them internationally competitive, Elias shared.

The third sector left for preparation was that of the government and other relevant stakeholders, Elias said. Against this point, the CEO explained, “I hammered on each and every interview, [that the] government [had] to come together and start looking at all this money that will come in and try to have a broader discussion, where you also look at the opposition, and also at the other social partners.”

These discussions, the CEO said, had been focused on how the significant revenues from the oil sector would be spent and invested.

“How much will we put aside in a fund or a sovereign fund for the next generations to come and how much will be spent now? And if we know how much we will spend now, where we will spend it? Will we spend it on education? Will we spend it on healthcare? Will we spend it on infrastructure?” – And these were the critical questions the government had to find solutions to,” Elias pointed out.

Suriname finding these solutions, Elias pointed out, paved the way for the country to strengthen its institutions.

Six years later, Guyana still struggles

In 2015, ExxonMobil struck oil in Guyana’s Stabroek Block. Six years has passed, with Exxon now aggressively producing oil, and Guyana has still not managed to implement critical provisions to ensure that Guyana prudently manages the sector as well as secure maximum benefit for its people.

Currently, Guyana manages its oil and gas sector with draconian legislation and operates without: a proper Local Content policy; ring-fencing provisions to prevent costs of unsuccessful wells being carried over to that of successful wells; proper environmental protection legislation; the strengthening of key auditing agencies, specifically the Office of the Auditor General; appropriate technology offshore to monitor the measurement of oil remotely; a roadmap to use a portion of the oil money to build sustainable industries; benchmarks for Corporate Social Responsibility; the establishment a Depletion Policy; the establishment of a Decommissioning Policy; a structure for what is to be expected in Field Development Plans; the hiring of technical experts needed within the Ministries of Natural Resources, EPA, the Guyana Geology and Mines Commission (GGMC), the Guyana Revenue Authority (GRA) etc; and updated policies/laws/regulations regarding direct and indirect transfers of interests in offshore blocks.

This is just the tip of the proverbial iceberg.

 

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