January saw news of a potential major oil find in Suriname. The significance of this discovery will reshape plans for nation-building in the country’s capital of Paramaribo and could give the Surinamese new optimism around their future. It will also require a rethink among other stakeholders regarding the oil industry in the Caribbean‚ and around the world.
There are three key questions regarding this news: How will it impact the average citizen of Suriname? What does this mean for Suriname on the world stage? And, closer to home, how does this reshape the dynamics of the regional oil industry, especially as it concerns Guyana?
Who Will Really Benefit From This Find?
The new untapped source of Suriname’s economic potential was found at the Maka Central-1 well, located on Block 58. It was discovered through the operations of the Noble Sam Croft drillship, with America’s Apache and France’s Total each taking a 50 per cent working interest.
Beyond Maka Central-1, attention now turns to exploration of the Sapakara West-1, 20 kilometres southeast on Block 58. Just as Guyana’s oil wealth came in instalments as new discoveries were announced, so too are the odds strong that Suriname’s bright start to the year is just the first chapter in a series.
This discovery creates a number of new calculations for Suriname regionally, as it does for countries further afield that maintain a strong influence locally. In particular, the possible emergence of Suriname as a big player in the oil industry is sure to be received with mixed feelings in Washington DC.
The new revenue from oil could lift individual wealth in the nation of around 600,000 which last year had an estimated GDP per capita of US$6,310. However, Suriname has a troubled record of corruption, human trafficking, use of child labour and other offences which throw into doubt any possibility that this potential new wealth will translate into a widespread improvement of the citizenry’s opportunities and standard of living.
Complicating the picture further is Suriname’s close ties with Beijing, especially financially. Neither government is keen to encourage a viewpoint that suggests the former is vulnerable to the latter, as Beijing and Paramaribo spin the relationship as one of investment and friendship. Leaders of the resource-hungry economic giant could view Suriname’s find as the perfect avenue to utilise its financial power over the Latin American nation in their bilateral relationship, and to leverage the Asian nation’s own standing and ambitions within the region generally.
The Guyanese Considerations
This discovery in Suriname also has many implications for Guyana‚ especially with an election upcoming in March. Suriname is held to have secured a royalty deal of around 6.25 per cent, which is three times the rate acquired by Guyana for its Stabroek Block, and this means new pressure will be placed on Suriname’s neighbour to bring stakeholders back to the negotiating table.
Politicians seeking to show why their vision of an oil-rich Guyana should see them occupy the seats of government will now need to observe Suriname’s pursuits in the same space. Guyana will also need to reconcile with its history of political volatility that has given investors pause for thought, and could yet hamper its future.
Conversely, it’s possible that Guyana could use Suriname’s new find to its advantage. In July 2019 GlobalData’s Alessandro Bacci issued a warning that if Guyana went ahead with a proposed hike on future oil royalties, its competitiveness in the industry would be diminished. That was last year, and now any adjustment to Guyanese royalties must factor in Suriname. Also, any new Guyanese government in March, with a fresh electoral mandate, may be ready to push hard for more favourable terms, based on Suriname’s agreement.
New Priorities in the Region
The months and years ahead offer much promise for Guyana and Suriname in their quest for greater national profitability based on their oil finds. The two neighbouring nations could reap the rewards of a greater interest in their resources‚ with new investment in one nation driving interest in doing the same in the other. Even so, each needs to be mindful of the competition just over the border.
Any Caribbean government would like to be in the same shoes as Suriname and Guyana, given the immense revenue potential of oil discoveries. However, other nations around the world are seeking to expand and profit from their burgeoning oil industry going into the 2020s and beyond.
As the accompanying piece on page 3 shows, the Caribbean is making many promising inroads in renewable energy that augur well for the future, but the community of nations can hold many different definitions for when exactly the ‘future’ will demand a renewable-only economy. In the meantime, Suriname will find the potential growth of its oil industry will have countless parties seeking to capitalise on it. All that remains unclear is whether this will actually translate into much meaningful benefit for the Surinamese people as a whole.
