The Milkmaid’s Tale is coming to life in Suriname. Although oil has not yet begun to be extracted from the impressive crude oil field, which promises to revolutionize the economy of this small country, but The Government has already begun to spend it and make plans with this income. This is an ‘evil’ that afflicts many countries that overnight become rich nations (at least in theory) due to the discovery of great resources such as oil. It is still too early to draw conclusions, but the first indications seem to reveal that Suriname is not going to be as cautious as its neighbor Guyana, which is using oil money to build a sovereign wealth fund and finance infrastructure, hospitals, schools, etc. This is Suriname’s plan before it started extracting its oil.
The president of Suriname, Chandrikapersad Santokhi, announced this Monday that each citizen of the country will receive a part of the royalties from the energy sector, for a value of 750 dollars and with an interest of 7% per year. “Today I can announce the creation of a financial instrument that offers the people of Suriname a share of future oil royalties. In this way, our people become de facto owners of Suriname’s natural assets,” Santokhi said in a statement. .
The Suriname oil field
Little by little, this former colony of the Netherlands begins to appear in the reports of investment banks and international organizations for its untapped hydrocarbon resources, but above all the one called Block 58, an area very rich in oil. that has triggered the country’s economic expectations. The International Energy Agency has mentioned this country up to eight times in its latest report on medium-term crude oil forecasts. The IEA highlights the potential of this small country and examines the field that was the largest oil discovery in Suriname a few years agofindings that had not materialized due to bureaucratic problems and the fluctuations in the price of crude oil, which overnight make projects that seemed profitable cease to be so. Today, Suriname only produces 10,000 barrels of crude oil per day, but the investments being made in this field could catapult its production 20 times.
The most promising block for Suriname’s first marine barrels lies directly east of Guyana. Block 58 is a parcel jointly owned by TotalEnergies and APA Corporation and has finally achieved on October 1st the FID (final investment decision), which has led Suriname to launch the ‘flying campaigns’. Once the FID is approved, it is a matter of time before oil begins to gush from the seabed of Suriname through the use of a giant floating platform (half platform, half ship, called FPSO or Floating, Production, Storage and Offloading) like those used by Guyana to extract its crude oil. “It is expected that oil can be extracted around five years after the FID, with an FPSO designed to produce between 180 and 200,000 barrels per day,” the IEA says. This will multiply Suriname’s production by 20 in a matter of a few years. With this data, the Government of the small country has already begun to promise ‘expenses’ and checks to its citizens.
Oil and royalties for all
Under the name ‘Royalties for all’ (RVI), this financial instrument comes shortly after the French group TotalEnergies announced a million-dollar investment to develop an oil project located in Block 58, in the waters of Suriname. , where there are important crude oil reserves.
Santokhi explained that citizens will receive a savings note for the value of $750 and that the payment of royalties will be made “in the future”, once said oil from Block 58 has been sold. “The RVI is quoted in US dollars, so its value is stable, the payment will be made in Surinamese dollars. For people over 60 years of age and people with disabilities, options are being developed to receive them before 2028,” he added .
Last October, TotalEnergies announced a total investment of $10.5 billion in the GranMorgu project in Block 58in which it will be the operator and where it is associated with the American company APA Corporation.
Real exploitation does not begin until 2028
The wells in the project, which was the subject of a prospecting campaign completed in 2023, are located 150 kilometers off the coast of Suriname and exploitation is scheduled to begin in 2028.
To enter production, a floating unit with the capacity to treat 220,000 barrels per day will be used, taking into account that it has been estimated that its total reserves exceed 750 million barrels.
The Constitution of Suriname stipulates that “natural resources are property of the nation and will be used to promote economic, social and cultural development.” In this sense, Santokhi stated that the RVI is “a form of reward for several years of efforts necessary during macroeconomic and financial stabilization.”
The Santokhi Administration inherited, when it came to power in 2020, an unsustainable public debt burden, which reached 148% of the gross domestic product (GDP)compared to 41% in 2015. To reduce debt, the Government embarked on an ambitious reform agenda, which involved social cuts, and implemented a program supported by the International Monetary Fund (IMF).
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