TotalEnergies has confirmed its commitment to the massive oil development project in Block 58 off the coast of Suriname, with Chief Executive Officer (CEO) Patrick Pouyanne announcing the company’s plans to shoulder a portion of APA’s CAPEX for the project. Total officials discussed the project during the company’s September 27 Strategy & Outlook event.
Though TotalEnergies and APA each hold 50% interest, Total is set to pay the lion’s share of the US$9 billion estimated development cost. This financial arrangement will allow TotalEnergies access to 75% of APA’s cost oil to facilitate the repayment of the carry, presenting strong economic potential for Total.
According to Pouyanne, “This carry is not a big deal for us… it will be repaid quite quickly in three years at US$60 per barrel. We are paying part of the CAPEX of our partner. We will recover all that in three years from their cost oil… the higher the price it will be, the quicker it will be.”
Nicolas Terraz, President of Exploration and Production at TotalEnergies, emphasized the value of the resources to be tapped at Block 58 offshore Suriname. He said the two significant oil discoveries – Sapakara South and Krabdagu – hold nearly 700 million barrels of recoverable resources. The resources will be developed at a pace of 200,000 barrels per day (bpd). Terraz further mentioned, “This project meets our requirements in terms of unit cost and emissions intensity.”
Terraz revealed that the technical cost of the project is US$20 per barrel of oil equivalent (CAPEX + OPEX), and that estimated (Scope 1 +2) emissions intensity from the project is 13 kg/boe.
“We’ll access quite a lot of oil actually during the first year thanks to the reimbursement of carry of Apache, our partner. And you see… the internal rate of return of 15% at US$60 per barrel,” Terraz stated.
This offshore deepwater oil development project has garnered much attention due to its sheer scale, and the fact that it has been highly anticipated in Suriname. The development roadmap is already taking shape, with detailed engineering studies (FEED) launching by the end of 2023 and the final investment decision (FID) expected by the end of 2024. Production is anticipated to commence in 2028.