Staatsolie Maatschappij Suriname N.V: Uncovering one of South America’s largest untapped oil reserve

United States Geological Survey data shows offshore Guyana-Suriname Basin to have one of the largest untapped oil reserves in South America. As Suriname’s state oil company, Staatsolie Maatschappij Suriname N.V. is set to strike big

In a world that’s craving more and more energy, oil is often described as ‘liquid gold’.

But as depletion of the resource becomes an ever-closer reality, energy firms across the globe are scrambling for one thing: to strike the next big oil reserve.

It may seem like a one-in-a-million occurrence, but this bright future is in the close grasp of Staatsolie Maatschappij Suriname N.V.

“It’s not a question of whether we will find oil offshore, it’s a question of when,” says Rudolf Elias, Managing Director and CEO. “Chances of success are greater than 50% and I don’t have any doubts – we are making ourselves ready for such an oil find.”

Staatsolie has seen roaring success in the past 37 years, producing over 109mn barrels of crude oil from the onshore Paleocene and Eocene reservoirs in Suriname.

Yet, offshore Suriname is virtually unexplored. Now, after finding a promising prospective oil reserve in the Guyana-Suriname Basin, the firm is preparing itself to hit big and, in doing so, it is set to become a major player in the oil industry. 

The Guyana-Suriname Basin

Located off the north-eastern coast of South America and encompassing the coastal area of French Guiana, Suriname, Guyana and the eastern part of Venezuela, the prospective sedimentary basin is an exciting chapter in the company’s 37-year history.

The United States Geological Survey has ranked it second in the world for prospectivity amongst the world’s unexplored basins and 12th for oil among all the world’s basins explored and unexplored.

Offshore Guyana-Suriname might have one of the largest untapped oil reserves in South America. The region has all the markers of a next major oil province and it seems that Staatsolie is set to play a major part in this oil-rich future.

However, Staatsolie doesn’t underestimate the challenges that lie ahead and so it has established a thorough ‘strategy for success’ to assist it on this journey.

A thorough strategy for success

“Through our ‘strategy for success’, we want to become a partner of choice for international oil companies (IOC’s) that want to invest in the offshore business,” explains Elias.

The meticulous strategy outlines how the company aims to refocus its upstream activities. For instance, as a market that has been characterised by oil price volatility, Staatsolie is aiming to become a company that is driven by cost as well as production. To achieve this, the company is aiming to remain a first quartile oil producer, that is, a company producing within the lowest 25% of the cost curve. But how will Staatsolie achieve such cost-saving measures?

“It’s been a complete culture change,” explains Elias. “We divided the whole organisation into assets where everyone is responsible for their own production and costs. Then, based on that asset management principle, we put in an incentive system in place. That incentive system is not only based on cost and production; it also rewards individuals for their health, safety and environmental performance and that has been incredibly successful so far.”

People-first company

This culture shift has meant that people are more responsible for their own actions and strive to truly uphold the company’s rich core values. By becoming a more people-focused company, Staatsolie has ensured that the right people are in the right roles at all times. At the end of the day, this has ensured that its workforce comes to work with a true sense of purpose and leaves with a sense of accomplishment.

What’s more, the integrated oil company has also optimised its downstream activities and overhauled its financial system through account audits. In doing so, the oil company hopes to prepare for partial privatisation through an initial public offering (IPO).

With over 26 years’ experience working for international names such as BHP Billiton, Elias has a wealth of industry knowhow. As a result, he recognises that to be successful, you need to have a concise, purposeful long-term vision.

“I think that we’ve gained a strong reputation in the industry because even though we are a national oil company (NOC) that does a lot for the community, we are still a purely commercial firm and think long term” observes Elias.

Staatsolie Vision 2030

This diligent planning is clearly evidenced by Staatsolie’s Vision 2030. Gearing up for a sustainable energy future for Suriname, the detailed plan outlines Staatsolie’s aims: to develop Suriname’s hydrocarbon potential over the full value chain, to generate electricity, and to develop renewable sustainable energy resources. It also sets out to establish a solid position in the regional market and to expand its reputation globally

Planning and preparation is a common thread which is interwoven throughout the company’s operations and, as a result, Staatsolie is diligently battening down the hatches to prepare for its next big oil find. Elias and his team are not spending huge amounts of capital or borrowing to prepare. Instead, they are strategically developing to become the partner of choice.

Although he is almost certain that oil will be found in the Guyana-Suriname basin, Elias is keen to maintain a realistic perspective. Therefore, Staastsolie is also working diligently to maintain the company’s current production rate.

“We produce over 6mn barrels of oil on an annual basis and we’d like to sustain this production level for at least 30 or 35 years,” says Elias. “The big question is, how can we extract more oil in an economical way in order to keep the momentum until 2050? That is the base strategy that we are following with our production department, our refinery, and our retail market – how can we sustain what we already have?”

This sense of pragmatism not only applies to Staatsolie’s production. It is also helping to redefine what the company’s key commodity could be in the future. Elias predicts that oil demand will peak between 2030 and 2040 before the volatile price will plummet. Thanks to the company’s cost-conscious approach, he is confident that Staatsolie will continue to thrive as a lowest cost quartile oil producer.

Exploring renewable energy

Yet, the future of the oil sector is a murky one and so Staatsolie is keen to tap into a new commodity – renewable energy.

“If you are in that low-cost quartile, you will be able to survive price volatility in the long term, but no matter how you see it, oil is an ending resource,” Elias says. “We should look beyond oil and what is it we are currently looking at? It’s renewables. When we have excess cash in the coming years, we would like to take a percentage of our capital expenditure, say 5-10%, and invest that in renewables.”

However, this is more than just a case of buying the resources and shifting the company’s focus. This is a long-term transition and so Staatsolie will not just be investing in the resources, it will also be investing in its people to make it a reality.

“If I take an oil man, give him some solar panels and ask him to manage it, I will make a loss,” explains Elias. “This is because he is not prepared, he is not ready to manage renewables. We should invest in the renewables themselves, but we should also start preparing the minds of our people, especially our young people, to learn how to manage this new resource.”