PARAMARIBO, Suriname, CMC – The state-owned oil and gas company, Staatsoli, Monday signed a letter of agreement (LoA) with the US-based company ExxonMobil and the Malaysia-based Petroliam Nasional Berhad (Petronas) to further explore the gas discovered in 2020 with the Sloanea 1 exploration well in block 52.
The LoA was signed by Staatsolie director Annand Jagesar, Petronas’ executive vice president and chief executive officer Upstream, Adif Zulkifli, and Paul Riley, the branch manager of ExxonMobil Exploration and Production Suriname.
“A key component of feasibility is the guarantee of a tax-free period of 10 years from the start of production. This is also stipulated in the agreement letter, with government approval,” Staatsolie said.
A statement issued following the signing noted that the LoA serves as a basis for further negotiations for a supplement, a so-called ‘Gas Addendum,’ to the production sharing contract (PSC) for block 52 signed in April 2013.
Petronas made the gas discovery in block 52 in 2020—however, the small quantity needed to be considered commercially attractive to develop into a production field.
However, discussions with the stakeholders led to the LoA, which broadly sets out the agreements, principles, and conditions to investigate further and make the development of a commercial gas field in block 52 feasible.
Petronas will drill the Sloanea 2 appraisal well starting next month. A production test will be carried out to determine whether a commercial gas field is feasible.
“After the Sloanea-2 appraisal well is drilled, whether a commercial gas field is feasible will be determined. In that case, the first gas production would be around 2031 at the earliest.
“In that case, the first gas production would be around 2031 at the earliest, taking into account the construction time of the production installations,” Staatsolie said, adding that a possible commercial gas field will be developed via a so-called ‘Floating Liquefied Natural Gas project.
The agreement contains detailed provisions for developing an oil discovery into a production field. In the event of a gas discovery, it prescribes that parties will have to negotiate a ‘Gas Addendum.’
This addition to the production-sharing contract will lay down the procedures and conditions under which the Block 52 partners can assess the gas discovery and possibly develop and produce it.
Because the negotiations for the Gas Addendum can take almost a year, the agreements made are recorded in the LoA.
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