Jagdeo lauds Suriname for allowing citizens to invest in first oil project

Feb 21, 2025 News

---

…says Guyana can do same in fertilizer plants, offshore service vessels

By Shania Williams

Kaieteur News- Amid concerns over his government’s management of the oil sector, Vice President Bharrat Jagdeo on Thursday lauded Suriname for giving its citizens the options to invest in its first oil project, although warning of the risks involved.

On the 31st January 2025, Suriname state oil company, Staatsolie officially launched the Staatsolie Bond 2025-2033 to raise at least US$250 million and EUR 50 million. The bond is set to take effect on March 23, 2025, with an eight-year term. The interest rate is set at 7.75% for the US dollar bond and 7.25% for the euro bond. With the minimum investment set at US$100 or EUR 100, local investors in Suriname are encouraged to participate, with larger investments available for those in Suriname, Curaçao, or Sint Maarten, starting at US$30,000. Local investors can participate from as little as US$100 or EUR 100, a strategy that makes it accessible to as many people in Suriname as possible. Staatsolie said for larger investors residing in Suriname, Curaçao, or Sint Maarten, a denomination of US$30,000 is available.

Speaking at his weekly press conference at Freedom House in Georgetown, Jagdeo praised the initiative but warned of the risks involved, especially for the local investors. When asked to share a comment on Suriname’s approach to the oil project and if this initiative is something that can be introduced in Guyana, Jagdeo stated, “I think while it’s a laudable thing, they have to raise a lot of money, let’s see if it’s going to be subscribed to in Suriname but you also have to tell people about that risk, that when you put your money, an ordinary person, you’re dependant on what happens with the oil and gas sector in the future, you may  not get back any return if the project doesn’t do well versus investing in a bond.”

Jagdeo further explained the differences between Suriname’s and Guyana’s approaches to oil project financing. He stated, “Suriname is taking a different approach, they have an option in their project development to take equity in the project so when you take equity in a project, you have to raise the money. So at the national level given the constraints Suriname has now, I think there’s a limit to its borrowing because of the state of the financing in Suriname. So it has to raise money.”

While Jagdeo acknowledged that taking equity offers potential for greater returns, he also emphasised the risks involved. He explained, “If you take equity in a project, then you have the possibility of getting a greater reward at the end. But remember, equity is remunerated only after you’ve cleared costs, including the cost of borrowing.”

Jagdeo also outlined how this initiative may be used in other projects in Guyana, particularly in sectors like fertilizer plants or offshore service vessels. He stated, “If we build a fertilizer plant in Guyana, maybe we could have people take equity in the project or invest through bonds. [Additionally], the vessels supplying offshore so if we structure some of those in a way that provides multiple opportunities for Guyanese. If you invest in a bond, you know the bond will state the rate you’ll get 10% for the year, you might get higher than the interest rate you are getting in the bank, but you know you getting that definitely because that is paid in the first order, it’s above the line, it’s part of the cost of the project.” However, Jagdeo warned about the risks of equity investments, stating,” If you invest in equity now, you take ownership of the project, you buy your share, you have to wait until all those costs are cleared and then you have to decide whatever the profit is so if you don’t make profit for the year, assuming say the oil prices and you don’t make profit in a year, you are not getting a return in an inequity investment because it’s remunerated only from profit. So it sounds good but you also have to look how you manage your money.”

Guyana vs Suriname

Guyana’s oil deal has been compared to Suriname in the past by Managing Director Staatsolie, Annand Jagesar, who highlighted the low returns Guyana accepted in its Production Sharing Agreement (PSA) with ExxonMobil and partners. This includes a measly 2% royalty, no taxes and 50% profit split after 75% is deducted by Exxon for costs.

Jagesar had made it clear that Suriname’s position is that “…everybody has to survive in this partnership.” In the meantime, Jagdeo previously admitted that Suriname has better terms in their agreement than Guyana’s 2016 agreement. 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. It should be noted that Guyana does not have a stake in the massive petroleum production activities ongoing offshore in the Stabroek Block. ExxonMobil has increased its  daily production capacity to almost 700,000 barrels at the three projects – Liza One, Liza Two and Payara.

Guyana’s leaders have refused to implement a ring-fencing provision which would have allowed the country to receive higher profits today, since the cost of these three developments have already been recovered by Exxon. Since February 2024, President of EMGL, Alistair Routledge revealed that Exxon had already recovered some US$19B in expenses.

It should be noted that the three oil projects currently producing oil, the Liza One, Liza Two, and Payara projects collectively carry a price tag of about US$19B. This means that the country could have been receiving higher profits this year from the three projects; however, in the absence of ring-fencing, Exxon will use the revenue to invest in other developments and even fund its exploration programme. Essentially, ring-fencing means that profits from one project must cover the expenses for that initiative. In the absence of such a provision, a company is allowed to use profits from one project to cover the costs of another.

(Jagdeo lauds Suriname for allowing citizens to invest in first oil project)

---

• Amid concerns, first oil project, Georgetown, Vice President Bharrat Jagdeo

---