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LatAmOil COMMENTARY LatAmOil

The deal led Reuters to describe Block 58 as a In March, though, the coronavirus (COVID-
“long-shot” prospect in late December. The 19) pandemic struck. Bouterse’s government,
news agency also recalled analysts’ pessimism like so many others around the world, attempted
about Maka Central-1, saying that Apache’s to curb the spread of the virus by introducing
primary motivation for teaming up with Total restrictions on movement and travel. These
might have been to secure enough cash to con- public health measures hurt Suriname’s vital
tinue its exploration campaign elsewhere. tourist sector, but they also had unintended
consequences. The country’s economy is cash-
Breakthrough based, so many consumers reacted to the
But in early January, Apache and Total offered lockdown by withdrawing as much money as
some good news to the public, reporting that possible from the banks to ensure their ability to
they had found substantial reserves of oil in the buy necessary supplies.
first exploration well. John Christmann, the The president then responded by impos-
former company’s CEO and president, said the ing currency controls. This move drew sharp
discoveries vindicated Apache’s conclusion that criticism from the business sector, which was
the field held “oil and condensate in shallower already suspicious of Bouterse’s administration
zones and oil in deeper zones.” because of its unilateral decision in January to
Christmann did not reveal the size of the seize around $250mn worth of hard currency
reserves. But the Wood Mackenzie energy from local banks in order to cover imports of
consultancy said several days later that Maka basic goods.
appeared to contain 300mn barrels of crude oil, As such, by the time the president stood for
150mn barrels of gas condensate and 1.4 trillion re-election on May 25, Suriname was in turmoil.
cubic feet (39.65bn cubic metres) of natural gas. Most voters blamed him for the upheaval and
Then in March, an analyst for GlobalData, a data threw their support behind his rival Chan San-
and analytics consultancy, said it was “reason- tokhi, a former justice minister who headed the
able to assume a potential of 300mn barrels of investigation that led to Bouterse’s conviction
gross recoverable oil” for the field. on murder charges in 2019. The results of the
The partners then moved their drillship to election were announced in June, with Santokhi
the Sapakara section of Block 58. Another dis- being declared the winner.
covery followed in April, when Apache revealed Many observers assumed that Bouterse, who
that Sapakara West 1, the second exploration had been in power off and on since 1980, would
well, held both crude oil and gas condensate in try to remain in control. Instead, the president “
the upper Campanian layers and oil in the lower agreed to step down, and Chantokhi was inau- Suriname’s new
Santonian layer. It described the find as substan- gurated on July 16.
tial and stressed that the second well had tapped government has
into a distinct fan system separate from the one Looking ahead
observed at Maka. In some respects, these developments are good indicated that it
Subsequently, Apache and Total moved the news for Apache and other oil and gas compa-
Noble Sam Croft to drill in the Kwaskwasi sec- nies eyeing the offshore zone. supports oil and
tion of the block. Earlier this week, the US com- They appear to ensure that Suriname will gas development
pany announced another discovery at the third not follow the example of Guyana, where David
well, Kwaskwasi-1. Once again, it said, the field Granger, the incumbent president, has refused and will work
appears to contain large amounts of both oil and to accept the results of an election that did not
condensate in the Campanian layers. It did not go in his favour. to attract more
comment on the composition of the Santonian His actions have brought the government
layer but indicated that it had found hydrocar- bureaucracy, including the agencies responsible foreign investors
bons there. for awarding the permits and approvals needed
The partners’ next move will be to send to proceed with drilling and other operations,
the drillship to Keskesi, another section of the to a standstill.
block, to spud a fourth exploration well. They are But in other respects Suriname is probably
upbeat about their chances of finding more oil, headed for more turmoil. The economy is still in
condensate and gas, especially since Keskesi lies terrible shape, and many of Bouterse’s corrupt
along the same trend as the other three fields. allies still hold positions of power and influence.
Tourism is still on hold because of the pandemic,
Political background and oil prices have dropped far enough to raise
When Apache and Total announced their questions about the viability of offshore projects
first discovery in January, they had reasonable such as Apache’s Block 58.
grounds to expect Suriname would remain rela- Even so, there are some positive signs. The
tively stable in the near term. new government has indicated that it supports
Despite a certain amount of popular disgust oil and gas development and will work to attract
at widespread corruption under the government more foreign investors to the sector. Meanwhile,
of Desi Bouterse, the country’s long-serving Petronas (Malaysia) and its partner Tullow Oil
president, the political scene appeared to be sta- (UK/Ireland) are gearing up to drill their first
ble. The local economy was in rough shape, but exploration well at Slonea, a field within Block
the hope was that hydrocarbon revenues would 52, in the fourth quarter of this year.
eventually help resolve that problem, as the oil- In other words, no one is giving up on Suri-
fields were due to begin producing in 2026. name yet. ™

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