Oil sector sees future in partnerships
COMMODITY-RICH SURINAME IS LOOKING FOR FOREIGN PARTNERS TO PARTICIPATE IN THE EXPLORATION OF ITS HUGE ON- AND OFF-SHORE OIL RESERVES, BELIEVED TO EXCEED ONE BILLION BARRELS

Suriname’s abundant natural resources include not only gold, but ‘black gold’ as well. The country has proven reserves of 175 million barrels, but further exploration in near- or off-shore areas might push that figure as high as one billion barrels of crude oil.
The state-owned petroleum monopoly, Staatsolie, determined to accelerate the already respectable rate of growth of oil production, is now preparing to reach out to foreign partners.

Drilling rights to a total of 17 exploration blocks are to be auctioned off over the next three years, beginning later this year with one onshore and six near-shore blocks. The contracts will also involve production-sharing agreements. Staatsolie will hold a seminar in Houston at the end of next October to explain its offer to those companies having previously shown interest, which will then have six months to study the data and tender a bid.
The managing director and founder of Staatsolie, Eddie Jharap, is sparing no efforts to connect with appropriate partners, which he expects are likely to be new or medium-sized firms. “You have to keep promoting the open acreages, and the more data you have, the better your chances of attracting somebody’s attention will be,” he says. “The competition (with other countries seeking foreign partners) is growing,” he notes. “The time when countries would wait passively until an oil company came is almost gone.The companies can comfortably select the best possibilities, in technical as well as financial terms.”

In this respect Mr. Jharap is pleased that the new government has approved an amendment to the Petroleum Act on taxation which will be “very accomodating, by removing companies’ fears that tariffs might change if their exploration is successful.” He explains that “the law will guarantee that the tariffs for taxes and income taxes will remain fixed for the term of the contract.”
With this provision on tax stability, Mr. Jharap feels, the conditions for investment in the petroleum sector have been further improved. He points out that “Suriname is a place that has been open to foreign investment for a long, long time,” and adds, as an example: “Alcoa has been here since 1915 or so.” According to Mr. Jharap, the record shows that “despite internal political developments from time to time, Suriname is very strongly consistent with respect to foreign investment.”

For foreign oil companies coming to Suriname, the production sharing agreement which will be linked to the drilling rights contract is the best formula, Mr. Jharap feels. “They’ll have as a partner Staatsolie, which has the operating experience in this country and which can help them develop relations with various government institutions, also becoming the link, the government agent,” he says.
Staatsolie plans US$100 million of investment over the next four years, boosting production from 13,000 to 20,000 barrels per day by 2004 and maybe expanding the capacity of its refinery for Saramacca crude from 7,000 to 8,000 barrels per day.