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the world's largest oil reserves country

Update Time: 2022-06-10

Oil Majors Are Lining Up For The Next Great South American Oil Boom

The Guyana-Suriname oil basin may hold much larger reserves than anticipated.

Suriname is looking to replicate Guyana’s oil boom through 2030.

Low projected breakeven prices and discoveries of light to medium sulfur crude makes Suriname an attractive location for oil majors.

The Guyana-Suriname Basin has emerged as the world’s hottest offshore oil play and with the changes occurring to the global energy mix after the war, the Caribbean is becoming an important player in world oil markets. In the space of a mere 7 years, the micro-state of Guyana has emerged as a leading global drilling destination after ExxonMobil made 32 discoveries in the offshore Stabroek Block. While the U.S. Geological Survey predicted in a May 2001 fact sheet that the Guyana-Suriname Basin held somewhere between 2.8 billion and 32.6 billion barrels of undiscovered oil resources, there are signs the volume is far greater.

Exxon’s discoveries in the Stabroek Block alone are estimated to be nearly 11 billion barrels of recoverable oil resources. Then there are TotalEnergies and Apache’s five major hydrocarbon discoveries in offshore Surname Block 58 which is estimated to hold up to 6.5 billion barrels of recoverable oil resources. Additional petroleum discoveries have been made in offshore Suriname. In December 2020 Malaysia’s national oil company Petronas, with partner Exxon, made their first promising oil discovery in offshore Suriname Block 52. Suriname is seeking to replicate the epic oil boom being enjoyed by neighboring Guyana which has significantly boosted the economy. In 2020 Guyana’s gross domestic product expanded by a whopping 43.5%, despite the pandemic, and by another impressive 20% in 2021.

To garner further international investment and promote exploration in offshore Suriname the national government in Paramaribo through the national oil company and industry regulator Staatsolie completed a shallow water auction in 2021. That saw Suriname’s petroleum industry regulator award three blocks toward the end of that year. TotalEnergies, which will be the operator, and partner Qatar Petroleum are inking contracts for shallow water Blocks 6 and 8 with a 49% and 20% interest respectively, while the remaining 40% is held by Staatsolie. U.S. energy supermajor Chevron, which also participated in the auction, was awarded a 60% holding in shallow water Block 5 with 40% remaining in the hands of Suriname’s national oil company. In December 2021 Chevron sold a 20% interest in Block 5 to Royal Dutch Shell. Then in April 2022, Staatsolie signed a production sharing agreement with Chevron for shallow water Block 7 awarding 80% to the U.S. energy supermajor while retaining a 20% interest. Chevron also holds a 33.3% interest in deep water Block 42 which is adjacent to Block 58 and the Canje Block in neighboring offshore Guyana. Those shallow water blocks have not been explored and are thought to possess considerable oil potential with analysts speculating that they sit on the same oil fairway that runs through Block 58.

To attract further investment and bolster exploration in offshore Suriname Staatsolie announced in May 2022 that it intends to auction further deep-water blocks at the end of the year and then conduct another shallow water bid round in 2023. While Suriname’s oil auctions have failed to garner considerable interest in the past that is likely to change because of the success enjoyed by TotalEnergies and 50% partner Apache in offshore Block 58. Earlier this year TotalEnergies, which is the operator, announced a fifth significant oil discovery in the block at the Krabdagu-1 well. While the energy companies have yet to make a final investment decision TotalEnergies believes there are sufficient recoverable hydrocarbon resources in Block 58 to justify further development and make production worthwhile. It is anticipated that TotalEnergies and Apache will make a final investment decision regarding Block 58 before the end of 2022, with first oil expected before the end of 2025.

Low projected breakeven prices and discoveries of light to medium sulfur content crude oil in Suriname make the impoverished former Dutch colony, like neighboring Guyana, a compelling jurisdiction for foreign energy companies. Various industry analysts estimate that offshore Suriname will have an average breakeven price of $40 per barrel, which is only slightly higher than Guyana’s which is pegged at an average of around $35 a barrel. Importantly, the oil discovered to date has had an API gravity ranging between 34 degrees and 43 degrees as well as low sulfur content. The crude oil being pumped by Exxon from the Liza field in neighboring offshore Guyana’s Stabroek Block has an API gravity of 32 degrees with total sulfur of 0.58% and 23.5 parts per million of vanadium. It is anticipated that offshore Suriname holds crude oil with similar characteristics making it light and sweet, which means it is cheaper and easier to refine than the crude oil produced by nearby South American countries.

The world's largest oil reserves country

, Colombia, and Ecuador typically pump heavier crude oil varieties that have high sulfur contents as well as elevated levels of metals and other pollutants. The world's largest oil reserves country’s flagship Merey blend has an API gravity of 16 degrees, 2.45% sulfur, and 262 parts per million of vanadium, demonstrating that is heavy and especially sour. Colombia’s primary crude oil variety Castilla has an API gravity of 18.8 degrees, 1.97% sulfur, and vanadium content of 319.95 ppm, indicating that is it heavy and sour. Ecuador’s key petroleum grade Oriente, which accounts for around two-thirds of the Andean country’s oil exports, has an API gravity of 23 degrees, sulfur content of 1.4%, and vanadium of 65 ppm. Those characteristics make those crude oil grades more difficult and costly to refine into low sulfur content high-grade fuels. It also means they are more carbon intensive to produce and refine compared to the lighter sweeter crude oil grades that exist in the Guyana Suriname Basin.

Those characteristics make those petroleum varieties less popular in a global economy that is being decarbonized and where oil companies are under increasing pressure to reduce their carbon footprints. It was for those reasons that oil supermajors TotalEnergies and Equinor chose to exit their non-operated minority stakes of 30% and 10% respectively in the world's largest oil reserves country

’s heavy oil project in the Orinoco belt. That saw its national oil company PDVSA become the sole owner of the asset which is a highly carbon intensive operation where the bitumen like extra-heavy crude produced must be upgraded before being exported. Those factors are also weighing on investment in Colombia and Ecuador’s economically crucial oil industries, which are struggling to recover to pre-pandemic operations.

As a result, a massive offshore oil boom is building in Guyana and Suriname with the two South American microstates garnering considerable attention from global energy supermajors. This is enhanced by both countries proving themselves to be relatively stable jurisdictions, especially when compared to many members of the OPEC cartel, like the world's largest oil reserves country

. Those developments have triggered a geopolitical transition in South America with Guyana and Suriname becoming increasingly important jurisdictions for global energy companies and countries seeking high-quality low carbon intensity crude oil imports. Foreign investment in Suriname’s nascent is growing at a steady clip. The country, which is currently pumping around 16,500 barrels daily from the Tambaredjo field, is expected to be producing 650,000 barrels per day from Blocks 58 and 52 by 2030. That will give Suriname’s struggling economy a healthy boost and see the country potentially become South America’s fourth largest oil producer.

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