April 15, 2008

Repsol-YPF drilling for oil offshore Suriname

Caribbean Net News

PARAMARIBO, Suriname - Repsol-YPF and its US-based partner Noble Energy are to drill for oil offshore Suriname, a government official has confirmed. An oil rig arrived in Surinamese waters recently and it was expected that the exploratory drilling would commence last weekend, said Natural Resource minister, Gregory Rusland.

The drilling programme is scheduled for 65 days.  State-owned oil firm Staatsolie, the sole concession holder and agent for all oil activities in Suriname in April 2004, signed a 30-year production sharing contract with Repsol-YPF for exploration and production in its Block-30 concession, about 100 kilometers offshore. The contract allows Repsol-YPF to explore during an initial, six-year period.

Over the weekend Repsol-YPF was in the final stage of preparation to drill the first well. Rusland is hoping for positive results since the initial studies were not disappointing.  The prospects for the further development of the country are very good since other international oil firms are also showing an increased interest in Suriname ,which will also have spin-off effects for the economy.

The minister warned, however, that one should not expect oil production "tomorrow", if there is a commercially significant find. "In that case there is a lot of work and preparations still to be done before production could start," the minister added.

The drilling comes on the heels of a promising 2-D seismic study in the area in which the company has invested some US$3 million. The exploration stage is for 6 years and is divided into three phases. At the end of each stage Repsol-YPF has the option to withdraw if results are not promising.

The block lies 100 km off the coast, covers 18,600 sq. km. and has water depths of 100-1,000 mm. According to the contract Staatsolie retains the option to participate, with up to 10% interest in the development phase.

Block 30 concession is part of a block that was awarded to a consortium of France's Total, Anglo-Dutch Shell, and US-based Burlington Resources in August 1999. However, the consortium withdrew from the block after the first exploration phase in 2001 because the hydrocarbons prospect it identified was too deep to make it commercially viable.

The Guyana basin covers 170,000 sq. km. and in 2000, the United States Geological Survey (USGS) concluded that the Suriname-Guyana sedimentary basin contains 15 billion barrels of undiscovered oil.

Currently Suriname does not have any offshore fields producing oil. Staatsolie's crude production at year-end 2007 totaled 5.4 million barrels from the Tambaredjo and Calcutta oil fields. Staatsolie's refinery has a processing capacity of 7,000 barrels per day and produces diesel, different grades of fuel oil and asphalt bitumen. Most of these petroleum products are being sold locally, and the surplus is exported to the Caribbean.

Besides Repsol YPF, offshore production sharing contracts are also in place with Noble Energy, Maersk Oil, Teikoku, and Murphy Oil. Currently Staatsolie is considering expansion of its refinery in order to also produce gasoline and boost production to 15,000 barrels per day.