Suriname may be one of the smallest countries in Latin America, with a population of fewer than 600,000 people, but off its coast lie potentially significant oil and gas deposits that could alter the country’s future.
Two large discoveries in recent months by US oil exploration and production company Apache Corporation and French oil major Total have offered hopes for an offshore bonanza for the former Dutch colony. The country is looking to mirror its neighbour Guyana, where ExxonMobil recently started production from deepwater oil blocks.
Suriname currently produces just 16,000 barrels a day from onshore fields. But the US government estimates that the Guyana-Suriname basin may contain nearly 14bn barrels of oil — in line with the resources of Argentina — and more than 32tn cubic feet of natural gas.
The country’s ability to turn its resources into commercial oil and gas depends on exploration — the earliest stage of the production process and an activity that stands as a barometer for pressures facing the wider industry.
Oil exploration is an expensive and risky business that can take years and billions of dollars of investment. As cost pressures mount and demands on companies to act on climate change grow, this segment of the industry is coming under intense scrutiny. Once the most glamorous aspect of the oil business, exploration is now one of its most controversial.
Environmentalists and some activist investors — especially in Europe — are pushing oil companies to shrink their legacy fossil fuel businesses, stop their search for new acreage and focus instead on lower-carbon technologies and alternative sources of energy.
Executives must also face up to an uncertain demand outlook, despite relatively robust oil consumption patterns today. From government policy changes that disincentivise fossil fuel use to the adoption of electric cars, the future shape of oil demand in the decades to come is unclear.
And all that was the case before coronavirus sent the global economy into its worst crisis since the Depression, with the industry now wondering what the pandemic’s longer-term impact on oil demand — which stood at close to 100m barrels a day last year — will be. After a more than 8m b/d fall in 2020 the International Energy Agency expects recovery of nearly 6m b/d next year.
While oil is likely to stay a large part of the broader energy mix for the foreseeable future, even if consumption peaks and then plateaus for a prolonged period, the industry is deeply unsure about the outlook for the exploration business.
“In 30 years’ time you will not have these new frontiers where they will look for oil,” says Rudolf Elias, head of the state-owned oil company Staatsolie Maatschappij Suriname. “In 30 years’ time we will have just the oil that is already…