Suriname and Venezuela may be neighbors in northern South America but they are moving in totally different directions in terms of oil and gas sector developments.

Suriname, which shares the Guyana-Suriname basin with its neighbor Guyana, has been undergoing exploration activities for some time and is now looking to soon join the deepwater production club, Rystad Senior Vice President and Head of Latin America W. Schreiner Parker wrote in the company’s most recent Latin America Regional Insights report.

Venezuela, on the other hand, once the regional production leader, is struggling to retain relevance.

Countries across Latin America and the Caribbean are home to an abundance of oil and gas reserves onshore and offshore and offer investors ample opportunities to engage in exploration and production activities. Upstream projects in the region will contribute to continued production growth for years to come.

The most attractive upstream opportunities are nowadays found in Brazil, Guyana and Suriname. Venezuela offers little by way of exploration but its oil sector remains a mess.

While Brazil and Guyana are in different exploration stages, they expect to bring online at least 16 FPSOs between now and 2026. In Suriname, APA Corp. and TotalEnergies SE are seemingly overdue on taking a final investment decision (FID) regarding a development offshore in Block 58. 

Suriname’s Pending Investment Boom

Suriname, a minimal oil producer, is just finally venturing into deep waters as it chases a similar fate as its immediate neighbor Guyana. The small Dutch-speaking country has attracted the attention of international and national oil companies from the U.S., China, Malaysia, France and other countries actively chasing exploration prospects.

Suriname’s Block 58 is on trend and borders Guyana’s prolific Stabroek Block where Exxon Mobil Corp. and partners Hess Corp. and China’s CNOOC have found around 11 billion boe to date. In Block 58, exploration results have been relatively good from U.S.-based APA and French major TotalEnergies even as the FID there has remained elusive longer than originally expected.

“Suriname is expected to see close to $23 billion in combined exploration expenditure (expex) and capital expenditure (capex) in its deepwater sector by 2031, putting it fourth in Latin America behind major oil and gas players Brazil, Mexico and Guyana,” Parker said.

The two-company international consortium has already expressed plans for a potential development hub in Block 58 that could potentially tap into and include output from Krabdagu, Keskesi East and Sapakara South discoveries due to the proximity of the finds. These fields are likely to develop a combined resource of around 365 million boe, Parker said.

In 2001, the Guyana-Suriname Basin was estimated to have a 50% chance of at least having undiscovered oil resources totaling 13.9 billion bbl and a 5% chance of at least having 32.6 billion bbl, according to a U.S. Geological Survey study. The same study estimated undiscovered gas resources at 37.8 Tcf and 96 Tcf, respectively.

Activities in the deep waters of Suriname could demand investments of $23 billion through 2031, Parker revealed in the report. Such investments would assist to transform Suriname into another key oil and gas producing province in Latin America and could see the rise in prominence of Staatsoliev Maatschappij Suriname NV, its vertically integrated state-owned company founded in 1980.

Total exploration spending is expected to be about $4 billion and likely peak in 2023 as companies in Block 58 continue operations and then move outside the block. Development spending is expected to soar to about $5 billion in 2031, owing mainly to efforts from operators APA and TotalEnergies, who will jointly be responsible for nearly 84% of the total $19 billion projected for the period, Parker said.

Putin’s War in Ukraine Keeps Venezuela in the News

Venezuela—once the poster child for what developing countries in Latin America aspired to achieve by successfully opening up their oil and gas sectors to foreign direct capital investments—continues to struggle. Ongoing political uncertainties and U.S. oil sector sanctions have stifled investor capital.

U.S. based-Chevron Corp., once a bellwether company to track in terms its activities and investments in the country, is struggling to maintain a presence. Meanwhile, Venezuela’s state-owned and cash-strapped Petroleos de Venezuela’s (PDVSA) attempts to lead the sector have proved in vain amid its lack of know-how, technology and government financial commitments, which, coupled with corruption, have depleted its spending cash resources.

Upbeat exploration, production and development activities planned for Suriname and already happening in Guyana have seemingly emerged in tandem with Venezuela’s economic and production declines.

Venezuela’s oil production reached a bottom in 2020 when it averaged 512,000 bbl/d, according to OPEC data. The plunge is believed to be the result of a combination of sanctions imposed in 2019 and then the pandemic in 2020, which created a perfect storm of sorts. But the dualling negative economic events were still not enough to see Venezuela’s President Nicolas Maduro step down from power, and much to Washington’s dissatisfaction.

However, Vladimir Putin’s war in Ukraine has rattled energy markets as well.

Russia’s oil and gas flows to key European markets and others have been drastically reduced due to sanctions imposed on the country. The subsequent energy crisis that followed Putin’s military invasion in Ukraine has been worldwide from Europe, which relied almost exclusively on Russia for energy supply, to the U.S. owing to energy-related inflation due to ongoing supply chain issues lingering since the early days of the pandemic.

Leaders across Europe continue to search for immediate impacts to reduce soaring energy costs and rising U.S. LNG imports are just one remedy being used to replace lost Russian energy supply. U.S. President Joe Biden continues to take measures such as tapping into the U.S. strategic reserve while pounding the pavement to reach leaders across Latin America to see what they can offer in terms of oil or gas supply over the immediate to short-term.


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Washington Approaching Venezuela

“The Biden administration has been putting out smoke signals to the wider market with increasing frequency that it’s ready to do business with the Chavistas in Venezuela, in some form or fashion,” Parker said.

Biden’s pitch to Maduro revolves around an oil deal that would surely involve Chevron and could assist Venezuela to pump more oil and exports to the world markets. But such a deal would only likely materialize once the ruling party and opposition commence negotiations again in Mexico City around a solution to the country’s multiple crises with a much sought-after “free and fair” elections being the U.S.’ primary end goal. However, achieving such a goal has proven to not be so easy.

While a regime change in Venezuela is high on the U.S.’ Christmas list this year, Washington would settle for traction on trying to solve the South American country’s growing humanitarian crisis. Venezuela has seen just over 6 million of its citizens flee the chaos and any help it could get in terms of extra oil barrels.

The U.S. is a natural market for Venezuelan oil with a number of refineries on the Gulf Coast already geared up to take the heavy crude the country produces.

Per OPEC data, Venezuela’s production recently peaked at around 3.2 million bbl/d in 1997. However, in September, the country was only producing around 700,000 bbl/d, according to details revealed recently by IPD Managing Director and Founding Partner David Voght during a webinar hosted by Florida International University (FIU).


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Assuming Chevron were allowed to operate again in Venezuela, “the corresponding production bump would likely only be around 100,000 bbl/d, which translates to 1% of the U.S. total daily demand,” Parker said. “Even if all sanctions were lifted, there is a natural ceiling of about 1 million bbl/d of production in Venezuela that couldn’t be surpassed without massive foreign direct investment into infrastructure such as upgraders and the like.”

But doing business with “the Maduro regime, which the U.S. Department of Justice describes as a mafia, is tricky,” he added. And a proposal to create a special escrow account to or use money to pay down debts PDVSA has with Chevron revenues is at most complicated.

“Considering how cash hungry the Chavistas are at this point it seems unlikely that Maduro would go for this type of arrangement,” Parker said. Such a reality makes for continued uncertainties despite increased efforts by the U.S. to engage with Maduro and his government despite the leader being labelled a “a narco-terrorist kleptocrat.”

“The question for his administration is whether the risk is worth the reward,” Parker concluded.