Staatsolie Maatschappij Suriname N.V. (“Staatsolie”), the national oil company of the Republic of Suriname, took advantage of the recent Latin Oil Week conference in Rio de Janeiro to promote Suriname’s latest international bidding round for oil and gas blocks. Staatsolie launched a competitive bid round for three offshore blocks in the Suriname-Guyana Basin on 1 August 2014, and is also offering two onshore blocks, for direct negotiation. 

Although this region is under-explored, parts of it share similar geology with the rich oil producing areas of West Africa and Venezuela. Indeed, Tullow Oil’s discovery of hydrocarbons in neighbouring French Guiana in 2011 was seen as evidence of the extension across the Atlantic of the Jubilee play from Ghana. The Jubilee field off the coast of Ghana was discovered in 2007 and has proven reserves of 3 billion barrels. Additionally, there are reports of similar rock formations in Suriname to the famous La Luna Formation in Venezuela and the Naparima Hill Formation in Trinidad. There is therefore a great deal of expectation within the local industry that this current round will attract further interest from international players and that a major discovery is just around the corner.

History of exploration in Suriname

The Republic of Suriname is the smallest sovereign state in South America and has a population of 566,000 and a total land mass of 165,000 km2. It lies to the north of the Amazon delta and has borders with Guyana, Brazil and French Guiana. The petroleum province comprises onshore blocks and an offshore region which is divided into 7 near shore blocks and over 20 offshore blocks. 

Oil was first discovered in the onshore district of Nickerie in 1928, but it was not until the sixties that serious exploration activities began. To date, oil is commercially produced from just a small number of onshore fields producing approximately 16,000 bopd. Offshore exploration has so far failed to lead to commercially recoverable reserves, in part due to a lack of quality seismic data. Despite this, competitive bidding rounds were commenced in 2001, following a study conducted by the United States Geological Survey, which concluded that the Suriname-Guyana Basin may hold 15 billion barrels of potentially recoverable reserves.

Pursuant to the Mining Decree of 1986, rights to onshore and offshore petroleum are granted exclusively to national oil company, Staatsolie. Staatsolie is responsible for managing the exploitation of Suriname’s petroleum resources, promoting available offshore acreage and negotiating production sharing contracts (“PSCs”). In addition to its institutional functions on behalf of the Suriname government, Staatsolie also functions as an independent vertically integrated oil company and is, along with its subsidiary, Paradise Oil, the sole operator of all onshore blocks.

A mixture of majors and independents have invested in previous bidding rounds with 34% of offshore blocks now under contract. Oil companies in the region to date include Chevron, Inpex, Tullow Oil, Kosmos Energy, Murphy Oil, CEPSA, Apache, Petronas, Statoil and RWE, which are now conducting seismic surveys in accordance with their PSC obligations.

The 2014 / 2015 Bidding Round

Currently, Staatsolie is offering three offshore blocks (58, 59 and 60) through a competitive tender process and two onshore blocks (Commewijne and Nickeris) by way of direct negotiation. Companies must first pre-qualify, demonstrating their technical, financial and management capabilities in order to participate in the bidding stage. The detailed rules are set out in the Invitation to Bid and a summary of key dates is set out at the end of this note.

Important points:

  • Model PSC 2014: Under this Suriname law production sharing contract, the winning bidder bears exploration risk and expenses for the exploration period of up to 7 years during which the winning bidder must carry out the minimum work programme, as proposed by it during the bidding process (60% weighting).
  • Staatsolie can elect to participate in development and production operations with a maximum participation of 20% and will then pay an equivalent share of all development and production expenditures.
  • Royalty: 6.25% royalty is payable on gross production.
  • Income tax: 36%, fixed for the term of the PSC.
  • Cost oil: 75 – 80% of the gross production after the royalty – used to reimburse exploration, development and production costs.
  • Profit oil: The remainder of the oil, after the royalty and cost oil, is shared between the bidder and Staatsolie. Bidders are required to bid on the profit oil split (40% weighting), which will vary according to the R Factor, which measures the cumulative profitability of the block.
  • Each qualified bidder or consortia may bid on a maximum of 2 blocks.
  • No signature bonus is payable.


Suriname is still a virtually unexplored territory, with only 25 offshore exploration wells drilled in an area of approximately 150,000 square km.  Although it is a frontier exploration play, Suriname’s promising geology has already attracted ten IOCs in previous bid rounds and it is surely just a matter of time before a major discovery is made. Indeed, with reported potential recoverable reserves of 15 billion barrels yet to be discovered, could Suriname become South America’s next oil giant?

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