Suriname at a crossroads in much-hyped exploration quest
Shell and TotalEnergies vying to take the baton from ExxonMobil on an intriguing play
13 October 2022
By Fabio Palmigiani in Rio de Janeiro
OPINION: With oil prices approaching the $100-per-barrel threshold again, exploration activities are beginning to gain a new momentum around the world.
The latest seismic imaging tools mean that risk and reward are more calibrated than in the golden eras of wildcatting.
New offshore provinces in Guyana, the East Mediterranean and Namibia have thrown up big new resources with attractive characteristics from the point of view of commercial returns and driving down carbon intensity.
Challenges on the much vaunted Guyana-Suriname basin show that hydrocarbon exploration remains the ultimate risk business, where secrets are not readily yielded up, even to the best seismic technology.
In Suriname, anomalies in the seismic data appear to be hampering progress on Block 58, where nearly three years have passed since Apache Corporation, now APA, found what seemed, at first, to be a world-class oil and gas resource with the Maka Central-1 wildcat.
TotalEnergies farmed in and took over the operatorship of Block 58, but a final investment decision on a mooted floating production unit has been repeatedly postponed despite eight follow up wells, most of which were described as discoveries.
A high gas-to-oil ratio seemed to be the main problem at first, due to limited demand for gas in a remote region, but concerns about a lack of correlation between well and seismic data may be more troubling.
Soaring oil and gas prices and mean it is unlikely that TotalEnergies and project partner APA will turn their backs on Block 58 any time soon. As the drilling programme stretches on, talk of a fast-track march to a floating production, storage and offloading unit has faded.
“Block 58 is still an exploration story,” a top executive of a leading floating production company said.
Back on the block
TotalEnergies is no stranger to this region. A decade ago, Total was pursuing what was thought to be a ground-breaking play in neighbouring French Guiana.
Tullow Oil’s Zaedyus-1 find was hailed as the play-opener there, persuading Shell to make a major move for the asset, taking over as operator.
Four $200 million dusters poured cold water on these ambitions, amid complaints the geology in the region made it very difficult to work out whether a reservoir was charged with hydrocarbons.
TotalEnergies made its own effort in French Guiana in 2019 with the Nasua-1 wildcat but the well was a duster.
Geologists have tracked migrations from Venezuela’s prolific Maturin source rocks, most notably in the La Luna formation, but ExxonMobil’s spectacular discoveries on Guyana’s Stabroek block are still the standout success east of Venezuela.
TotalEnergies’ difficulties on Block 58 mean the jury is still out on whether the geological constellation Stabroek is in fact a one-off.
Shell wildcat
Shell is back on the scene again after acquiring the rights to Suriname’s Block 42 from US independent Kosmos Energy in late 2020.
Kosmos relinquished the block after drilling the Pontoenoe-1 wildcat in 2497 metres of water, but Shell has targeted the ultra-deepwater Zanderij-1 prospect with targets in Santonian-age formations.
The well was spudded on 18 August, using the drillship Maersk Voyager, but it is a tight hole so far.
The Brazilian side of this fascinating oil trend will be tested again soon, with state-controlled Petrobras expecting to spud a landmark wildcat in the Foz de Amazonas basin later this year.
TotalEnergies will be watching with more than a passing interest there too.
The French company operated 12 blocks in the Foz de Amazonas basin but ended up pulling out after a frustrating and unsuccessful wait for licensing permits.
Guyana round
Guyana will play its own part in evaluating how much these oil riches are confined to the Stabroek block.
The challenges being faced in Suriname and indifferent results so far on the Canje and Kaieteur blocks mean Guyana will do well to offer some attractive incentives if it wants to see some serious drilling outside of Stabroek.
(This is an Upstream opinion article).
Seismic challenges delayTotalEnergies $10 billion Suriname project
Lack of correlation between well data and seismic data gives geophysicists a sore head
6 October 2022
By Iain Esau in London
TotalEnergies will not decide until mid-2023 on where to locate a floating production, storage and offloading vessel destined for its problematic $10 billion Block 58 project in Suriname, according to chief executive Patrick Pouyanne.
The head of the French supermajor attributed the delays to a lack of confidence in understanding the reservoirs discovered to date, driven by a mismatch between what seismic data shows and the results of delineation wells.
An FPSO design contest pitting Modec against a Yinson-Technip Energies group was due to be wrapped up in November 2021, after which the operator would have chosen its preferred bidder, targeting project sanction in early 2022 and first production in late 2025.
Bahamas increases monthly fuel charge
Oct 06 2022 – NASSAU, Bahamas
The government confirmed that the main electricity company will be increasing its monthly fuel charge in response to rising fuel costs, with the rate increase set to be reflected in consumers’ electricity bills beginning November.
Prime Minister Phillip Davis said the increases will be temporary and are expected to come down over the next 12 to 18 months.
“For a large majority of BPL (Bahamas Power and Light) customers, who consume less than 800 kWh (kilowatt hours), the fuel charge is increasing by two cents per kWh, which will result in an increase this quarter of less than US$20 per month. If your current monthly bill is US$182 or less, you fall in this category,” he said. “For those who consume more than 800 kWh, the increase will be 4.3 cents per kWh. I want to note here that we will raise the VAT ceiling from US$300 to US$400, so going forward, no VAT will be due on any electricity bills under US$400, which will take some of the sting out of the 4.3 cent increase for a great many BPL consumers subject to the larger increase.”
In February BPL has announced plans to increase customers’ fuel charges, but the company later recalled the statement with government describing the announcement as premature and ultimately denying the company approval for the increase.
Works and Utilities Minister Alfred Sears said that BPL would have no choice but to pass on fuel costs to its customers by higher electricity bills unless the government offers a subsidy to the company, which it later did given surging fuel costs globally.
Prime Minister Davis addressing the decision to delay the increase of electricity bills, said it was because of the economic hardship being experienced by Bahamians following the coronavirus (COVID-19) impact and recently, the inflationary cost of living.
“On top of that, in February, the Russian-Ukrainian war began, disrupting global trade and raising oil and gas prices sharply,” he said, adding he wanted to see stronger economic growth and more Bahamians working before giving the power company the green light to raise electricity bills.
“When times are tough, coming up with an extra US$20 a month is no small thing. Introducing the increase at this time of the year coincides with lower electricity consumption as opposed to the increase coming during the spring and summer months, when people consume more electricity. During this interim period, the government decided to provide support for BPL operations for an interim period.
“Unfortunately, we can’t postpone the increase any longer. Now that we are past summer, and moving into a period of lower electricity usage, the government has approved BPL’s request for this phased-in increase.”
BPL said the price increases will be gradually phased in from October 1 to November 30, 2022; December 1, 2022 to February 28, 2023; March 1 to May 2023; June 1 to August 31, 2023 and September 1 to November 30, 2023.
“During each phase of the implementation, customers can expect an increase of two cents per kWh up to 800kWh and 4.3 cents for all units over 800kWh.”
Prime Minister Davis listed several measures his administration will be implementing to help soften the impact of rising prices. Among them include the decision to phase in the price increases incrementally, allowing for customers to better prepare. CMC
Will Guyana share its wealth with Caricom?
Oct 05 2022
Less developed Caricom countries are being asked to appeal to oil-rich Guyana to accept the role which T&T assumed in 2007 when it was felt T&T was flush with money, and it could share the wealth with its Caricom brothers. Finance Minister Colm Imbert, who suggested this in Parliament, said, however, that this would have to be a Caricom decision, not Government’s.
He was responding to Opposition Chief Whip David Lee’s query about a $105 million Budget allocation for the Caricom Development Fund and Lee’s subsequent observation that Guyana is now on an oil growth path.
Imbert said the fund was started when oil was US$106 a barrel and gas was US$13.
“There was a view that because T&T was in a very good position in those days, it should assist the less fortunate member states within Caricom. But that has not been sustainable since then and from time to time we provide funding for this fund. But there are questions about it as to whether the T&T Government should provide funding of this magnitude to that fund. It’s really something that is subject of discussion from time.”
He said Lee made a good point on Guyana. Imbert also confirmed property tax field assessors have been properly identified. Some $7.6 million is allocated for their short-term employment to complete property assessments for property tax collection.
Imbert said the plan for a group pension plan for daily-rated workers isn’t fully operational at this time. More funding was also allocated for Customs overtime, as importers were requesting goods to be processed quickly as possible. Funding was also allocated for scanners for the Port Authority and for upgrades of container examination at the PoS and Pt Lisas ports.
Funds are allocated for the Clico/CIB matter and for HCU liquidation—the latter which, he said, is taking a very long time to do
Oil Posts First Quarterly Loss in Two Years as Recession Fears Grow
by Bloomberg | September 30, 2022
Oil shed nearly 25% to post its first quarterly loss in more than two years as escalating fears over a global economic slowdown and a stronger dollar overshadowed concerns of tightness in oil supplies.
West Texas Intermediate settled below $80 a barrel Friday, down from a high of above $100 at the beginning of the quarter. Crude has been battered by the dollar’s surge to a record over recent weeks, as central bank rate hikes darken the outlook for global growth.
The shrinking price is a concern for the Organization of Petroleum Exporting Countries, which has signalled its willingness to protect oil prices. OPEC+ is discussing plans for an output cut, which could stem the slide and give the market more direction. Analysts from RBC Capital Markets to JPMorgan Chase & Co. have said the producer group could pull anywhere between 500,000 to 1 million barrels a day of supply.
“Next week’s OPEC+ meeting is the next big catalyst but expect trading until then to be choppy and reactive to dollar moves,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management.
Meanwhile, China issued new crude import and fuel export quotas as it seeks to revive its economy, which has been hard hit by Covid-19 lockdowns and a housing slump. Crude prices rallied after the quota was announced, while the giant oil product allocation for exports weighed on profits from turning crude into refined fuels. Factory activity in the Asian nation struggled for momentum in September, while services slowed, data released Friday show.
Prices:
WTI for November delivery fell $1.74 to settle at $79.49 a barrel.
The more-active Brent contract for December settlement dropped $2.04 to close at $85.14 a barrel.
Widely watched time spreads in US oil futures have been ticking higher. The spread between the nearest two December futures contracts was at its strongest level in a month, indicating traders are growing steadily more bullish on the market’s outlook.
Caribbean Community (CARICOM)
Sep 30 2022
BRIDGETOWN, Barbados (CMC) — The Barbados Government has welcomed the latest ratings given to the island by the US-based rating agency Standard and Poor’s (S&P) that kept the kept Barbados’ long- and short-term sovereign credit ratings at a highly speculative grade.
Prime Minister Mia Mottley, who earlier this month announced plans for Bridgetown to approach the International Monetary Fund (IMF) for a second External Fund Facility (EFF) loan, said the announcement by S&P is an indication that Barbados had done reasonably well in the present turbulent circumstances even as she warned that Barbadians still had a “very tight rope” to walk.
In its latest ratings, the credit rating agency said it reaffirmed its ‘B-/B’ long- and short-term sovereign credit ratings on Barbados, and its ‘B-’ issue-level rating on Barbados’ debt. In addition, S&P reaffirmed its ‘B-’ transfer and convertibility assessment, and issued a stable outlook.
In outlining its rationale for keeping the island’s “B-/B” long-and short-term ratings with a stable outlook, S&P said it considered Barbados’ debt repurchase and prepayment “opportunistic and akin to a liability management operation, given that we believe the Government could have fulfilled its financial commitments absent this transaction, and that it was conducted with the purpose of directing funds to conservation efforts for Barbados’ marine environment and to promote a sustainable blue economy.”
S&P said its stable outlook reflected the view that the island continued to make progress under the Barbados Economic Recovery Transformation (BERT) programme, having met benchmarks under the IMF’s EFF arrangement.
“The ‘B-’ ratings reflect our view that despite external challenges, including the pandemic, a hurricane, volcanic ashfall, and global geopolitical tension, Barbados’ progress under the domestic BERT programme, and its achievement of IMF EFF targets, will continue to facilitate access to financing from multilateral institutions. At the same time, we believe that high reserve levels will continue to provide external liquidity to support the country’s balance of payment position,” it explained.
“The ratings also incorporate our view of Barbados’ stable and mature political system, despite past issues with sustainable public finances, as well as an economy that has struggled with low growth and is vulnerable to external shocks, given its high concentration in tourism. At the same time, Barbados has limited fiscal and monetary policy flexibility, in our view, given a high debt burden, fixed exchange rate, and weak monetary policy transmission mechanisms following the completion of its debt restructuring in 2018 and 2019,” it added.
Mottley, speaking at the ground-breaking ceremony for US$50-million hotel at Christ Church on the island’s south-west coast, said:
“it is ironic that as we meet today we meet with the shadow of Standard and Poor’s agreeing to uphold our rating and to have a stable outlook on Barbados. This comes at the very time when there are about 46 countries globally that are on the precipice of a debt crisis. The world is in serious difficulty. I would like Barbadians to appreciate that we can make it but we are going to walk a very tight, tightrope, and that means everyone is engaged and understanding that this is not business as usual, nor is the world the same as we came to know it.”