July 2021 – Mariana Vargas – Suriname, located on the Atlantic coast and a former Dutch colony, is now emerging as the new Guyana from an oil perspective. This nation shares the most dynamic oil basin in the region. Although this nation is within Latin America, it shares more the idiosyncrasy of a Caribbean island with the legacy of a Dutch colony.
Its development is attracting huge investments in the oil sector and already has the presence of oil giants such as Total and Shell, investing in exploration and foreseeing future offshore actions from Suriname. Also in June 2021, Staatsolie announced the award of production sharing agreements with Chevron, Total and Qatar. Eight more blocks are expected to be awarded by November.
Suriname has had an unstable political history. Its previous president of ten years in office; Desire Bouterse, was a former army sergeant who took power into his own hands. He was charged with murder by a court in the Netherlands and pleaded guilty in a Surinamese national court. After his defeat in the national elections he retired and has not been sent to jail.
The new president Chan Santokhi is a former police chief and minister of justice. All hopes to grow as a country, economically and socially rest on his shoulders. Every attempt at corruption and greed in order to cling to power has bled a rich country dry, generating 11% of unemployment and a financial crisis that is not stopping, according to the International Monetary Fund. However, Suriname is negotiating its foreign debt and promises to pay it with crude oil production, hence its great relevance for the national economy.
President Santokhi has chosen to face this economic battle with the oil sector. He has opened the doors of Suriname to private oil companies and has encouraged investment with low royalties of 6.25%, compared to those of neighboring Guyana, not so low, but competitive enough compared to those of Brazil and Mexico. In addition, they have published figures showing that companies can make money with oil prices as low as $30 to $40 a barrel, due to the low production costs the country offers.
The concern that most oil companies and international organizations, such as the UN, have is that history tends to repeat itself and that the “resource curse” is a fact. Venezuela is the perfect example of this theory and the same concern applies to Guyana. One positive way to view this economic upswing is through Staatsoil, Suriname’s oil company – an institution Guyana did not have in 2015 when Exxon made its discoveries – ensuring Suriname’s accountability and transparency.
Suriname could become an interesting topic of conversation; from an underdog to one of the richest countries in South America, all thanks to a black gold hiding in the depths of the ocean.
What can we expect from Suriname? Smart decisions and a clean administration, its economy and oil sector depend on it. Guyana was a talking point in the oil market and now it is Suriname’s turn, showing promising business opportunities. If you are looking to invest in South America and have arrived too late in Guyana? Suriname might be the best option.