The Atlantic waters off Guyana have become one of the world’s hottest oil-drilling zones. Now, international oil executives are looking at neighboring Suriname.
Exxon Mobil Corp., Royal Dutch Shell PLC, French oil giant Total, Apache Corp. and several other companies are gearing up operations off Suriname’s coast. They hope that the South American country, which recently emerged from decades of authoritarian and corrupt governments, will be the next great oil source.
But the world has more than enough oil, and prices for petroleum products are relatively low. In addition, investor interest in oil companies is waning as concerns about climate change give momentum to electric vehicles and renewable energy.
Those concerns are not hampering interest in Suriname. Oil companies say they can make money there with oil prices as low as $30 to $40 a barrel because of lower costs. That is roughly equivalent to the threshold in Guyana and well below oil’s current price. It is also below break-even levels in many places, including some U.S. shale fields, where costs usually add up to nearly $50 a barrel.
One reason it is easier to make money is that Suriname demands a smaller cut from oil companies than several other Latin American countries, including Brazil, Bolivia and Mexico. Suriname wants to attract investment and jump-start a troubled economy, which the International Monetary Fund expects to contract by 13.1% this year, and fix its ailing finances.
“Suriname could be big,” said David Goldwyn, a consultant who was the top State Department energy diplomat in the early years of the Obama administration. “Under almost any scenario the world is going to be using less oil over time. The winners in the race to share what remains of the oil pie will be those who can produce oil at low cost.”
Suriname has at least 3 billion to 4 billion barrels of reserves, energy experts said.
But exploiting those reserves in a way that benefits its people could prove a challenge for Suriname, a former Dutch colony that has been politically volatile and governed for much of the past 40 years by Desire Bouterse, a former army sergeant who took power in a coup. In 1999, a court in the Netherlands convicted Bouterse of drug trafficking. In 2019, a court in Suriname convicted him for the 1982 murders of 15 political opponents and sentenced him to 20 years in prison. He lost an election and retired last year, but has not been sent to prison.
The new president, Chan Santokhi, a former police chief and justice minister, faces many challenges, including the coronavirus pandemic and a fiscal crisis. The unemployment rate last year was 11.2%, and inflation is extremely high; and the IMF expects consumer prices to jump nearly 50% this year.
Oil and gas exploration could easily lift the country of about 600,000 people out of poverty if Santokhi’s administration makes the right moves.