TotalEnergies and APA Corp. are launching development studies related to their Suriname offshore Block 58 where they plan to start detailed engineering studies by the end of 2023 and announce a $9 billion final investment decision (FID) by year-end 2024.

Two fields will be tapped for the development and will have a combined production capacity of 200,000 bbl/d. First oil is slated to flow in 2028, TotalEnergies and APA said Sept. 13 in separate press releases.

In recent months, executives from both APA and TotalEnergies have expressed growing confidence in the potential of developing the block and creating the South American country’s first offshore oil hub.

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“Ultimately, pursuing a commercial development is a positive outcome that was not entirely certain, particularly in light of numerous growth sanctions that TotalEnergies is undertaking,” TD Cowen said in a Sept. 13 research report.

“Expectations or hopes had been for an early 2024 FID, though we note that the FID will merely be an end point to a declaration of commerciality. While perhaps a year after expectations, first production of 2028 follows reasonable timing from FID to first” oil, the report said.

Truist Securities said that while the development timeline might be considered “slightly longer than some investors expected, we anticipate the initial year-end 2024 target for FID will end up being conservative,” Truist said in a Sep. 13 research report.

 700 MMbbl recoverable?

Potential development of Block 58 is the result of successful appraisal work at two main oil discoveries at Sapakara South and Krabdagu that were completed in August, according to APA. Two wells were drilled at Sapakara South and three at Krabdagu.

Appraisal work at the two fields confirmed combined recoverable resources of around 700 MMbbl, APA said. The fields, located in water depths between 100 m and 1,000 m, will be produced through a system of subsea wells connected to an FPSO 150 km off Suriname’s coast.

“Importantly, due to the wording of TotalEnergies’ press release, there may also be some confusion and/or misinterpretation of the resource estimate of ~700 MMbbl, which is actually the likely recoverable amount and not just the total suggested resource in the fields,” Truist said.

France’s TotalEnergies operates Block 58 with a 50% interest, while APA holds the remaining 50% and has an interest in the adjacent Block 53. TotalEnergies, which has been in Suriname since 2019, has also been exploring potential in Block 6 and Block 8 since 2023.

“This development is in line with TotalEnergies’ strategy aiming at the development of low cost, low emissions oil resources, and leverages on our company’s expertise in deep water projects,” TotalEnergies Chairman and CEO Patrick Pouyanné said.

TotalEnergies said development of Block 58 would go a long way to create jobs and spur economic activities in Suriname. The French company said it will use the “best available technologies to minimize greenhouse gas emissions” while the “facilities will be designed for zero flaring, with the associated gas entirely reinjected into the reservoirs.”

Suriname President Chandrikapersad Santokhi was quoted in TotalEnergies’ press release as applauding the announcement around the development of Block 58.

“Suriname is going through a challenging economic period. This announcement provides the much-needed outlook towards positive developments for our nation,” Santokhi said.

Offshore