U.S.-based APA Corp. and its French partner TotalEnergies announced a much-anticipated $10.5 billion final investment decision (FID) for the GranMorgu project located offshore Suriname in Block 58.

A minimal oil producer, Suriname is finally venturing into deep waters as it chases a similar fate to Guyana. Suriname—the small Dutch-speaking country situated between Guyana to the west and French Guiana to the east—has attracted the attention of international and national oil companies from the U.S., China, Malaysia, France and other countries actively chasing exploration prospects.

APA and TotalEnergies (operator) on Block 58 each hold a 50% interest in GranMorgu—which can be translated from the local language Sranan Tongo to “new dawn.”

Staatsolie Maatschappij Suriname NV, Suriname’s national oil company lacking offshore experience, is expected to exercise an option to enter the project with a 20% interest, APA and TotalEnergies said Oct. 1 in separate press releases.

APA and TotalEnergies agreed that Staatsolie will contribute to the project from FID and finalize its interest before June 2025, TotalEnergies said—a move that would reduce APA and TotalEnergies’ respective interests to 40% each. Staatsolie has yet to announce how it will finance its portion of the capex.

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As for APA, the company sold off about $2 billion in non-core assets to pay off almost $5 billion in pro forma net debt after closing on a deal to acquire Callon Petroleum in April.

And, “APA's share of development capex remains 12.5% after Staatsolie's participation that results in effectively $1 billion of capex burden that is in part helped by a $0.375/bbl royalty on the first 1.5Bn bbl produced,” analysts with TD Cowen said Oct. 1 in a research report.

But “depending on the timing of payments for GranMorgu, APA should be able to cover the majority of capex using free cash flow,” the TD Cowen report said.  

TD Cowen assigned roughly $4.50/share in value to GranMorgu alone, which is consistent with its prior assumptions, the analysts said in the report.

First oil production from GranMorgu is set to flow in 2028, APA and TotalEnergies said.

GranMorgu will include a 220,000 bbl/d floating production, storage and offloading (FPSO) vessel designed to accommodate future tie-backs, which could extend its four-year production plateau, APA and TotalEnergies said.

Both the FID amount and the size of the FPSO exceeded original estimates prior to the FID announcement, said TD Cowen analysts.

TD Cowen said its expected FID amount was around $9 billion, while the size of the FPSO was smaller at 200,000 bbl/d.

“This new announcement increases expected production by 10% and the investment by 17% from the previous estimate. These numbers are in-line with Exxon Mobil’s Whiptail project in Guyana, which was sanctioned at $12.93 billion for a 250,000 bbl/d FPSO,” the TD Cowen analysts said.

Suriname, which shares the Guyana-Suriname basin with its immediate neighbor Guyana, has been undergoing exploration activities for some time and is now looking to soon join the deepwater production club.

Suriname could see around $23 billion in combined exploration expenditure (expex) and capital expenditure (capex) in its deepwater sector by 2031, according to Rystad Energy, ranking the country fourth in spending in Latin America behind major oil and gas players Brazil, Mexico and Guyana.

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Development plan

Forecasted investment for Suriname have the potential to transform the country into another key oil and gas producing province in Latin America, following Guyana’s lead. Additionally, there is potential for Staatsolie, founded in 1980, to rise in prominence.

GranMorgu is Suriname’s initial deepwater development and the first on Block 58. The project will tap into two main oil discoveries at the Sapakara and Krabdagu fields, where appraisal drilling has confirmed gross estimated recoverable resources exceeding 750 MMbbl, both APA and TotalEnergies said in their respective releases.

During TotalEnergies’ second-quarter 2024 webcast, CEO Patrick Pouyanné said the Block 58 development had estimated recoverable oil of over 700 MMbbl.

Both discoveries, Sapakara and Krabdagu are located in water depths between 100 m and 1,000 m and will be produced through a system of subsea wells connected to an FPSO located 150 km off Suriname’s coast.

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In addition to reaching approval for the Phase-1 Central Area Field Development, the partnership has retained optionality for further exploration in Block 58. This will allow the partnership to fully explore the significant remaining potential of the block in the proven trend, as well as untested plays, APA said.

GranMorgu will feature technology minimizing greenhouse gas emissions, including an all-electric FPSO configuration with zero routine flaring and full reinjection of associated gas into the reservoirs, APA said. The project will also include the installation of an advanced methane detection and monitoring system and optimized power usage with a waste heat recovery unit and deep sea water cooling for improved efficiency, the U.S.-based company said.

The partners in GranMorgu envision significant investments that will contribute to the development of the Surinamese economy.

The capital city Paramaribo is expected to serve as the primary hub for administrative, support and logistic activities. Local companies will be involved in logistics, well services and the installation and operations of the subsea systems and the FPSO. The project is estimated to generate over 6,000 jobs (2,000 direct and 4,000 indirect and induced), according to TotalEnergies.

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