Petroliam Nasional Bhd. (Petronas) and Exxon Mobil Corp. have agreed to further explore a potential gas production area offshore Suriname where the leaseholders had declared a gas discovery albeit a commercially unattractive one, the South American country’s national oil and gas company said.
“The LoA [letter of agreement] is necessary for further exploration of the gas discovery made in 2020 with the Sloanea-1 exploration well in Block 52”, Staatsolie Maatschappij Suriname NV said in a news release.
The discovery “involved a small quantity that was initially seen as commercially unattractive to develop into a production field”, Staatsolie said. “The development of an offshore gas field is more challenging and complex to explore in technical and economical perspective than an offshore oil field”.
Nonetheless Petronas, which holds a 50 percent stake and the operating rights in Block 52, and Staatsolie held discussions to further explore Sloanea 1, which have now led to the LOA, the press release said. ExxonMobil holds the remaining 50 percent.
“This LoA is an agreement that broadly sets out the agreements, principles and conditions to further investigate and increase the feasibility of the development of a commercial gas field in Block 52”, Staatsolie said.
“An important part of the feasibility is the guarantee of a tax-free period of ten years from the start of production”, which has been granted in the LOA with the approval of the government, Staatsolie added.
Announcing the Sloanea 1 discovery December 11, 2020, its first hydrocarbon discovery in Suriname, Petronas said the exploration well “encountered several hydrocarbon-bearing sandstone packages with good reservoir qualities in the Campanian section”.
“The well data proves excellent calibration of the hydrocarbon potential of the block”, Petronas added, in a media release.
Following the LOA Malaysia’s national oil and gas company Petronas is now targeting the Sloanea 2 appraisal well. Drilling will start April and a production test will be carried out, according to the Staatsolie announcement.
The LOA serves as a basis for further talks for a gas addendum to the production sharing contract (PSC) for Block 52, which was signed April 2013, the press release said.
“In the event of a gas discovery, the PSC prescribes that parties will have to negotiate a 'Gas Addendum'”, Staatsolie said. “This addition to the production sharing contract will establish the procedures and conditions under which the Block 52 partners PETRONAS and ExxonMobil can assess the gas discovery and possibly subsequently develop and produce it.
“Because the negotiations for the Gas Addendum can last almost a year, the agreements made so far in the negotiations are recorded in the LoA”.
Petronas plans to start gas production 2031 if Sloanea 2 proves to be a commercial success. An associated floating liquefied natural gas facility could also be constructed, Staatsolie said.
On November 2 Petronas said it hit its second discovery in Block 52. The Roystonea-1 exploration well was drilled to 5,315 meters (17,437.7 feet), it said in a press release.
Drilling “encountered several oil-bearing Campanian sandstone reservoir packages”, Petronas added in the announcement on its website. The well sits about 185 kilometers (115 miles) off the coast of Suriname.
Petronas executive vice president and chief executive for upstream Adif Zulkifli said in the latest discovery announcement, “PETRONAS views the Roystonea-1 oil discovery as a positive development towards realizing our differentiated barrel strategy for international upstream ventures, focusing on a material discovery with minimal contaminants”.
“The success of Roystonea-1 is expected to drive further exploration for commercially viable hydrocarbon resources in the surrounding areas”, Petronas vice president for exploration Mohd Redhani Abdul Rahman added.
Located north of the capital city of Paramaribo, Block 52 spans 4,749 square kilometers (1,833.6 square miles), according to the owners.
Besides Block 52 Petronas also operates Block 48 with a 100 percent interest. It is also a partner with a 30 percent non-operating interest in Block 53, where the Baja 1 oil discovery was made in 2022.
ExxonMobil joined Block 52 in 2020 through a farmout from Petronas Suriname Exploration and Production BV for an undisclosed amount. The United States company conducts exploration and production activities in Suriname through ExxonMobil Exploration and Production Suriname BV.
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