By Ank Kuipers and Marianna Parraga
PARAMARIBO (Reuters) -TotalEnergies will begin studies for developing a $9 billion oil and gas project at Suriname's most promising offshore area, the French energy firm said on Wednesday during a visit by its CEO to the South American country.
Suriname's oil potential is closely watched as some of its fields are adjacent to the Stabroek block in Guyana, where an Exxon (NYSE:XOM) Mobil-led consortium has found 11 billion barrels of oil. TotalEnergy's Block 58 could become Suriname's first commercial offshore project.
TotalEnergies (LON:TTEF) CEO Patrick Pouyanne met with Suriname President Chan Santokhi and the head of state oil company Staatsolie on Wednesday to discuss the project.
TotalEnergies and U.S. partner APA are expected to make a final investment decision by the end of 2024 for the block, after investing some $1.3 billion in exploration. The decision is a crucial step in mega energy projects to greenlight development.
Staatsolie has participation rights of up to 20% if the development plan is approved.
"Block 58 development studies that we are launching today are a major step towards the development of the petroleum resources of Suriname," Pouyanne said.
TotalEnergies expects the project could be developed at a production cost of less than $20 barrel, Pouyanne said.
"We have reached a historic moment in our country," said Staatsolie CEO Annand Jagesar. The country could earn between $16 billion and $26 billion, he said, and "with good policy there can no longer be poverty in Suriname," adding it needed to make sure that oil wealth would be re-invested to propel the non-oil sector, instead of artificially expanding the economy, as has happened in Venezuela and Nigeria.
Following well appraisal drilling this year, the company confirmed cumulative resources of nearly 700 million barrels of oil and gas at block 58's two main fields.
The discoveries will allow production of up to 200,000 barrels per day of mostly crude, while associated natural gas initially will be re-injected to maintain crude output, and could be exported in further project stages, Pouyanne said.
The block plans to be developed through a system of underwater wells connected to a floating production, storage and offloading unit located 150 kilometers (93 miles) from Suriname's coast.
Detailed engineering studies will begin by the end of 2023 before a final investment decision is made by the end of 2024, with a target of having first production in 2028, Total said in a release.