(Bloomberg) -- TotalEnergies SE and APA Corp. approved a $10.5 billion project to develop the first oil discoveries off Suriname, with a view to pumping crude as soon as 2028.
The GranMorgu project, which will cost $1.5 billion more than forecast last year, includes a 220,000 barrel-a-day floating production unit, the French major and the US firm said Tuesday. The Sapakara and Krabdagu fields on Block 58, about 90 miles offshore, hold recoverable reserves estimated at more than 750 million barrels.
Suriname, a former Dutch colony on the northeast tip of South America, is years behind neighbor Guyana in bringing in foreign explorers to tap vast offshore oil troves. But when production starts, the windfall is expected to transform the economy of one of the world’s most sparsely populated nations.
TotalEnergies is the operator of Block 58 with a 50% interest, alongside APA. Staatsolie, Suriname’s state oil company, intends to exercise an option to enter the development, with an interest of as much as 20%.
“This will be the largest investment ever in our country,” Staatsolie Chief Executive Officer Annand Jagesar said in the statement. “This project will yield significant income for Suriname and needs to lead to better living standards for every citizen of Suriname.”
Overall local content is estimated to be more than $1 billion, and more than 6,000 direct, indirect and induced jobs are expected to be created in the country, according to the statement.
One factor behind the project’s rising cost is high demand for production vessels in Guyana, Brazil and elsewhere.
“There is upside pressure because of backlog in orders,” Jagesar said in an interview before the final investment decision was announced. “There’s some tension in the market.”
Total could explore the southern part of Block 58, and it also operates two adjacent blocks further south, where it plans to drill an exploration well as early as next year, Jagesar said.
The Sapakara and Krabdagu fields, located in water depths to 1,000 meters, will be produced through a system of subsea wells connected to the production vessel, APA said in a statement. It’s designed to accommodate future tie-back opportunities that would extend its four-year production plateau.
“The FID in Block 58 confirms that the Guyana-Suriname Basin remains one of the hottest exploration basins in the world,” said Schreiner Parker, managing director for Latin America at Rystad Energy AS. “This FID will go a long way in creating an oil, gas and energy hub based in the two countries of Guyana and Suriname that could eventually account for over 2 million barrels a day of production by the 2030s.”
(Updates with comments, project details starting in fifth paragraph.)
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