BMI View: Suriname is riding on the success of Tullow's Zaedyus-1 discovery offshore French Guiana as more players take interest in this frontier play. At present, it has no successes to show from local exploration activities that have taken place. However, this has not stopped the country from promoting its potential and offering new offshore licences in its latest licensing round. Weak drilling results from French Guiana in the past year could dent the level of interest in Suriname, though further exploration both domestically and in the wider region could de-risk the area and ascertain the frontier play's hydrocarbons potential.
Activity along the South American coast of the Atlantic Fairway Margin continues to build up. Suriname, neighbour to French Guiana where Tullow Oil made its Zaedyus oil discovery in late 2011, has recently signed a production sharing contract (PSC) with Malaysian national oil company (NOC) Petronas for offshore Block 52. In addition, the country is carrying out its fifth International Bidding Round for four offshore blocks, which will close on July 26 2013.
Exploration Lined Up
Petronas is obliged to carry out a 3D seismic survey and drill at least one well in Block 52 within the three-year exploration phase, bearing all commercial risks of its operations. Thereafter, if a commercial discovery is made, Petronas is entitled to recover initial exploration costs, which are estimated to be at least US$25mn. Suriname's NOC Staatsolie reserves a 20% option in the block if Petronas proceeds with development and production.
Block 52 is one of two blocks offered in Suriname's licensing round in 2012. The other licence, Block 53, was awarded to Apache Corporation, which is obliged to drill two exploration wells on its concession. In its press release, Apache's director of New Ventures Tim Chisholm indicated that the Zaedyus discovery offshore French Guiana has provided a key incentive in its interest, as it suggests that the Atlantic Fairway Margin play - where large oil finds have been made offshore West Africa and Brazil - extends to its latest acquisition as well. Other players in offshore Suriname include Kosmos Energy (which partners Chevron), Tullow Oil and Inpex (via subsidiary Teikoku Oil).
Limited Results To Show
Although Suriname is benefiting from the Zaedyus discovery offshore French Guiana, exploration in its waters has had limited results. Murphy Oil 's two exploratory wells on Block 37, lying on the border to French Guiana, turned up dry when drilled in 2010 and 2011. In 2011, Teikoku Oil also spudded the Aitkanti-1 well in Block 31, adjacent to Murphy's Block 37, but did not give details of its results beyond them being 'encouraging and valiant'.
This has not stopped Suriname from hoping for success. Its fifth licensing round will see blocks 54, 55, 56, and 57 put on the market - blocks newly carved out from the Demerara Plateau and lying on the border with French Guiana. As they lie further into the sea, they are likely to be deeper water acreage as well.
|The Search Is On|
|Offshore Blocks In Suriname|
Petronas, Apache, Kosmos and Tullow could also have better luck offshore Suriname. Kosmos and Tullow, which made their names from their strikes in the Atlantic Fairway Margin play off West Africa, are in the midst of conducting seismic studies for their acreage. Kosmos stated that it could spud its first well by early 2014.
The extent of interest in Suriname depend s as much on results from local campaigns as on the outcome of ongoing exploration in French Guiana. Subsequent drilling campaigns offshore French Guiana had proven less successful than Tullow's Zaedyus-1 hit. The UK independent failed to find commercially recoverable hydrocarbons at its Zaedyus-2 well in late 2012 ( see our online service, December 6 2012, 'Tullow Drills Duster But Prospectivity Remains' ). Its Priodontes -1 campaign, launched in early 2013, was even more disappointing as it encountered no hydrocarbons in the main target reservoir.
This could dent interest in Suriname's fifth licensing round, though bidders could find reward from taking on exploration risk in a frontier play. Eyes will also be on Tullow's exploration of its next p rospect in its French Guiana permit, Cebus. This could determine the hydrocarbons potential of a separate fan system from the Zaedyus-1, Zaedyus-2 and Prio dontes-1 well s in French Guiana, and give greater indication of what to expect from offshore Suriname as well.