Suriname to receive largest ‘take’ from first oil project

Oct 06, 2024 News

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– Staatsolie Head

 

Managing Director of the country’s state -owned Staatsolie, Annand Jagesar,  said that Suriname is to receive largest ‘take’ from first oil project 

 

Kaieteur News – Suriname oil and gas industry has hit an historic milestone with the Final Investment Decision (FID) made to develop the GranMorgu field in Block 58.

Surinamese President Chandrikapersad Santokhi said, “Suriname and its people welcome and appreciate the final investment decision of Total Energies and APA Corporation regarding Block 58 with Staatsolie. We consider this a historic and milestone occasion, creating significant opportunities and revenue prospects for Suriname, as well as attracting investors worldwide.”

He noted that the decision will boost the country’s domestic capabilities and investments and have a major impact on local content opportunities.

President Santokhi underscored the country’s commitment to a strong and loyal partnership. Notably, he said too that Suriname expects that the offshore oil and gas development will take off in compliance with environmental regulations and standards.

Annand Jagesar, Managing Director of Suriname’s state -owned Staatsolie, said, “What seemed like a distant dream is becoming reality. This will be the largest investment ever in our country; one in which Suriname will receive the largest share of the ‘take’.”  He noted that Staatsolie will supervise this.

Jagesar added, “This new opportunity comes with a shared obligation to ensure that Suriname will benefit optimally from the incomes from offshore oil. These will have to be put in use for the long-term prosperity of all Surinamese.”

He underscored that this can be achieved through good governance, transparency, zero corruption and the establishment and strengthening of institutions that guarantee that the income benefits the development of the entire Surinamese society.

The GranMorgu project

Recently, French-company TotalEnergies and APA Corporation announced the FID for the project offshore Suriname. The timeframe for the construction and installation, according to a release from Staatsolie, would take approximately four years. Suriname can expect first oil in 2028.

TotalEnergies is the operator in the partnership with APA in Block 58, each with a 50% interest.  Oil will be the focus of the GranMorgu project’s development.

Staatsolie said  that the majestic Goliath Grouper (Granmorgu) inspired the project’s name, a large fish found in Suriname’s coastal waters. With its size, the Granmorgu symbolizes the magnitude and significance of the upcoming development in Block 58. Notably, the fish can live up to forty years, which also indicates the productivity years of the GranMorgu project (minimum 20-25 years).

GranMorgu means more or less ‘a beautiful morning’ in Surinamese, this Staatsolie said represents a new dawn and the promise of a new beginning, for the energy sector of Suriname, and the country itself with new opportunities to work dedicatedly towards sustainable growth and progress.

According to current estimates and prices on the market, the project will cost more than US$ 10 billion. Notably, in accordance with the terms of the Production Sharing Contract (PSC), Staatsolie has plans to participate for a maximum of 20% in the development and production of the commercial field.

Better Deal than Guyana

This publication recently reported that in a video clip, Jagesar, compared the contracts of Guyana and Suriname during the announcement of the FID.

“Guyana, they have 2% royalty, and 50% profit split, no taxes, and here in Suriname, we have like 6.25 % royalty, profit split according to a certain formula, so the higher the oil price the better for Suriname, but the lower the oil price then the contractor gets protected and we have a stabilized tax rate of 36%,” Jagesar said adding, “So you can do the math and the deal is good but of course everybody has to survive in this partnership.”

On Thursday, Vice President Bharrat Jagdeo acknowledged that Suriname has better terms in their agreement than Guyana’s 2016 agreement. Jagdeo’s statement followed the publication of an article by Demerara Waves headlined, ‘Suriname boasts of better oil contract terms than Guyana’.

“I noticed Demerara Waves; Suriname boasts of better oil contract terms than Guyana. Not that anyone actually boasted about this… but it’s true that they have better terms than our 2016 agreement has and who is responsible for this again the APNU/AFC,” Jagdeo said.

New PSA

Jagdeo compared Suriname’s royalty rates with that of the new Public Sharing Agreement (PSA) saying that, “So if you look at their royalty rate of 6.2% royalty, we have just put in our new PSA, a 10% royalty rate that’s the new condition but the agreement that they have today is better than the 2016 agreement and we pointed this out many times.”

It is important to note that the new PSA referred to has nothing to do with the country’s current deal with ExxonMobil and its partners Hess and CNOOC nor is it related to the lucrative Stabroek Block offshore Guyana.

The new PSA will govern the smaller blocks that were part of the recent auctions. Furthermore, there have been no exploration activities or discoveries in any of these blocks. Therefore, citizens should be aware that the Stabroek Block arrangement remains the same, Guyana will get 2% royalty and 50/50 profit sharing.

Jagdeo in laying blame on the former administration for the 2016 oil deal noting that his government fixed the deal by addressing the non-fiscal terms so that Guyanese can benefit more from the sector.

“We sought to fix this by getting more benefits from the contract through the Local Content Law, the Gas-to-Energy project so that we can claim other non-fiscal benefits from the contract and we have had Exxon agree with that from the time we got into office, but this is great and I am happy for Suriname, very happy for them they have worked very hard at this,” he reasoned.

 

(Suriname to receive largest ‘take’ from first oil project)

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• governance, GranMorgu, Notably, President, recently, Staatsolie, TotalEnergies, Transparency

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