Suriname rakes in US$500M annually from oil sector, through robust policies

 Staatsolie :Annand Jagesar

 Mar 21, 2021  Kaieteur News – Guyana’s neighbour to the east, Suriname, is able to rake in US$500M annually from its lucrative oil sector. This achievement was not made by luck, but rather through robust policies and measures to ensure that the Surinamese government is in a position to reap significant benefits from the petroleum industry.

Annand Jagesar, the acting Chief Executive Officer and Managing Director of Suriname’s national oil company, Staatsolie, had revealed these figures during his presentation to the Guyana Basin Summit (GSB).   

This was a virtual three-day oil and gas conference, aimed at delivering networking and valuable insight into the region’s potential, along with its challenges and the road ahead. The summit concluded on Friday.

Jagesar reminded the virtual audience that Staatsolie is a 40-year-old entity, which started producing oil from one of Suriname’s onshore block in 1982. He explained that after revenue collection grew, Staatsolie moved to build a 55 kilometer pipeline to transport the oil to a refinery. At this refinery, the oil is purified and turned into products like gasoline, diesel fuel and even kerosene.

“We also use the heavy oil for power generations and recently we acquired the hydropower dam,” the acting CEO mentioned.
Jagesar went on to add Suriname’s proven oil reserves hold about 90 million barrels of oil, which they expect will deplete in 15 years’ time if production is at six million barrels per year.

“Our annual sales are about 5.6 million barrels per year,” the Oil Boss said, “and revenue is about US$500M.”

Notably, during the virtual January interview, former Staatsolie CEO, Rudolf Elias, was asked to provide some insight into the Surinamese experience in being a partner with oil companies that are interested in developing discoveries. He was quick to note that the benefits, particularly as it relates to monitoring costs to be incurred, provide a strong case for countries to have a seat at the table.

To this he said, “It is critical to have a seat at the table because you get to have someone who is part of the project team and who will know firsthand what are the costs…and we know there is a transparent process they will go through because we are at the table. They can’t inflate because we are there to see it and that is why I say Staatsolie should always have a seat at the table, because we want to know the costs of the different projects because it is the basis for the inflow the government will have.”

Currently, Staatsolie has a 20% participation stake in oil deals. Elias had indicated that it once stood at 10%, but after Guyana stuck oil one after the other, Suriname was inclined to raise it to 20%.

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Comments

  • brandli62  On 03/22/2021 at 10:18 am

    It’s unclear to me how they generate a revenue of 500 million USD with a production of 5.6 million barrels produced per year? The oil price was last year around 42 USD, which would amount to 235 million USD. Production costs and taxes need to be deducted. Staatsolie also runs a refinery to supplement Suriname with petrochemical products. Nevertheless it’s hard to see how the can generate the revenue stated. Does anybody have a clue to the secret?

    • Georgy Porgy  On 03/22/2021 at 11:24 am

      Creative accounting!!!

  • wally n  On 03/22/2021 at 11:50 am

    Anytime there is “Big” money there is shady reports. Public should follow Muhammad Ali’s take on big money reports.”Call it a billion dollar fight, just give me my $100 million,first.
    The Government may claim anything, the public should always ask, Where was it spent? Be sharp Be focused ASK QUESTIONS DEMAND ANSWERS.

  • Dion Mc Donald  On 03/24/2021 at 7:57 am

    Hi brandli62
    Great point.
    They are talking about revenues and not income. It is still difficult to have such revenues given the price of oil unless they are talking about revenue from the refined products as well.
    Dpm

    • brandli62  On 03/26/2021 at 5:12 am

      That’s exactly the point! The nice thing with a sovereign wealth fund managed along the lines of the Norwegian oil fund, is that it takes some time to build up and to generate revenues for the state treasury. This has also its good sides as the Guyanese economy will not be flooded with oil money, which typically leads to corruption and bad investments. Regarding the oil price, I believe that the outlooks for the coming years look good with oil prices around USD 60 or higher. I addition, Guyanese oil is sweat (low in sulphur) and thus best priced on the market. Overall, it would be good for the government not to touch the NRF until it has been building up sufficiently and good and transparent asset managers have been put in place. One idea would be to give the mandate to manage the NRF to the Norwegians running the oil fund. I would also put in the same criteria for withdrawing money from the NRF as is done in Norway. There is no need to reinvent the wheel (unless you want loop holes for politicians to stuff their pockets…).

      Finally, keep in mind that the Guyana’s proven oil reserves are significantly higher than those of Norway with a population of 1/7 of the Norwegian one. Hence, by 2030 the Guyanese government might have problems to spend the money in the NRF.

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