As Suriname awaits a final investment decision (FID) from TotalEnergies on the country’s first-ever oil development, an expert on risk says the fiscal part of this story has impeded the process.
Ford Tanner, Associate Director with the Exploration and Production (E&P) Terms and Above-Ground Risk team at S&P Global Commodity Insights, discussed the Suriname situation and the question of whether Total would choose the more competitive option of Namibia.
“Total has said that they want to take FID before the end of the year, but the fiscal part of the story there has been a big impediment. They have a 36% corporate income tax rate in Suriname. It’s one of the highest in the world, very uncompetitive,” Tanner said on the EnergyCents podcast episode 155.
Delay in Suriname FID shows TotalEnergies hesitant to fully commit to country – AMI analyst
He said Suriname is already trying to be more competitive via the 10-year tax holiday granted to Petronas and Exxon to develop gas at Block 52.
The oil development proposed by TotalEnergies at block 58 would tap into 700 million barrels of Block 58 crude oil. Total, in partnership with APA, seeks to produce at a rate of 200,000 barrels per day (b/d), with first oil scheduled in 2028.
The project would be a welcome boost to the Suriname economy, which is currently recovering from turmoil. The Suriname government is betting a lot on the project, including the restructuring of debt with oil royalties as collateral.
Total, on the other hand, has options. When its Chief Executive Officer, Patrick Pouyanne, floated the idea of delaying one of its planned Latin America developments in February, Staatsolie published a release quelling concerns.
“It is still too early in the process to talk about a delay of the project,” the Suriname state explorer and regulator said. Tanner said, “Our view is that Total frankly has some leverage with the government of Suriname, and with Total’s discoveries in Namibia, and allocation of capital kind of has its limitations. Capital is finite. Are they going to prioritize investing in Suriname when they have a much bigger asset base in Namibia?”
In the case of Namibia, Tanner said Total has fiscal terms that are “much more competitive.” Total made a massive discovery at the Venus well offshore Namibia in 2022, which was later subjected to positive appraisal. Pouyanne said earlier this year that an oil development targeting production up to 180,000 b/d is likely. Total is targeting a final investment decision by the end of 2025.
