The carbon negative South American country bides its time ahead of potential oil boom
The FDI angle:
Resource-rich Suriname, South America’s smallest country, is harbouring ambitions to become the next big play in offshore oil and gas.
The big picture: With Russian crude largely banned in the West, demand for alternative suppliers remains high. Suriname believes it has enough reserves to replicate the trajectory of neighbouring Guyana, where new oil discoveries have unlocked billions in FDI.
In early June, Suriname’s state-owned company Staatsolie hosted an energy, oil and gas summit in the capital, Paramaribo. The aim was to “bring Suriname to the attention of the world” and promote investment into the country’s nascent offshore industry.
The relatively unknown Dutch-speaking country of 600,000 people, located between Guyana, Brazil and French Guiana, is gearing itself up for a potential economic windfall. In early 2020, US exploration company Apache and France’s TotalEnergies jointly announced they had made a “significant oil discovery” off Suriname’s coast.
Subsequent discoveries have been made by Apache and the likes of US-based ExxonMobil and Malaysia’s Petronas. At time of writing, however, there has yet to be a final investment decision by any producer. Until that is reached, Paramaribo’s plans to give the crisis-prone economy a boost from offshore oil, similar to neighbouring Guyana, will be unrealised.
“I am convinced that the final investment decision will come,” says Albert Ramdin, a former gold mining executive who became Suriname’s minister of foreign affairs in July 2020. “The sooner the better, because then we can start earning from that resource. In the meantime, we can focus on getting ourselves better prepared for this very complex sector.”
A few firms have set up in Suriname to seize the opportunity. In 2022, Suriname attracted three greenfield FDI projects, the highest on record, but a small number relative to peers in the Latin America and Caribbean region, according to fDi Markets.
Beleaguered past
Suriname is the smallest South American country by landmass, but rich in biodiversity with 93% forest coverage. It is one of just three carbon-negative countries globally. The nation’s multicultural heritage shows in its population, most of whom live by the coast, made up of East Indians, Maroon, Creole, Javanese, Chinese, indigenous Amerindians and other peoples.
Since gaining independence from the Netherlands in 1975, the relatively young country has had a rocky path. Just five years later there was a coup d’état spearheaded by Desiré Bouterse, a military leader who later was democratically elected president in 2010 and for a second term in 2015. Mr Bouterse was convicted in absentia of drug trafficking, which he denies, by the Netherlands in 1999, and in 2019 sentenced by a Surinamese court for the 1982 murder of 15 political opponents.
President Chandrikapersad Santokhi, a former police officer and justice minister, took office in July 2020 with an agenda of fighting corruption, Covid-19 and boosting the economy. His government has pushed through economic reforms, such as floating the currency and raising taxes, aimed at reducing high levels of national debt and persistent inflation.
As part of plans to pave a new development path, the Suriname Investment and Trade Agency (Sita) was set up in May 2023. Sita aims to be a “single window” for foreign investors after the failure of three previous agencies, including InvestSur.
Henk-John Guicherit, who joined Sita as CEO after a career in banking and start-ups in the Netherlands, is advocating for “climate-compatible economic development”, balancing abundant resources with the selling of carbon credits. Suriname is in a “very strong position”, he says, as the only country globally to be “energy independent, carbon-negative with 93% forest coverage and on the brink of an oil and gas boom”.
Resource rich
Suriname’s economy is incredibly resource-dependent. Its main sectors are mining, onshore oil, agriculture and forestry. In 2021, almost 80% of export earnings came from gold, according to the Observatory of Economic Complexity.
Colorado-based Newmont Corporation is the country’s largest direct foreign investor, having operated its open-pit Merian goldmine since October 2016. Mark Rodgers, Newmont’s managing director in South America, tells fDi that the company has had a “very positive” experience investing in Suriname. He adds that “ongoing contractual stability and partnership with the government remain foundational” for natural resource development.
Some other mining firms operate, such as China’s Zijin, but artisanal and small-scale mining (ASM) is widespread. While it provides a living for about 25,000 people, ASM in Suriname has led to high uses of mercury, despite government bans and signing of the 2013 Minamata international agreement on mercury use.
The VSB, along with the government, have been trying to diversify the economy through the promotion of entrepreneurship, including in tech. Nilesh Bishesar, managing director of Qualogy Caribbean, a custom software provider, believes Suriname has “great potential”. He adds that the country’s Dutch-accredited education system has made it easy for European companies to outsource work to Suriname.
However, local entrepreneurs complain that there is still a need to streamline processes for business and property registrations, construction permits and boost investment into infrastructure, education and skills development. “Regulatory reform is crucial to reduce bureaucracy and make it easier for businesses to start and operate. Enhancing access to finance, particularly for small and medium-sized enterprises, is also important,” says Ms Bissumbhar.
Despite efforts to diversify the Surinamese economy, oil and gas remain its greatest opportunities. Following three successful drilling and flow tests, APA and TotalEnergies estimated in 2022 that more than 800 million barrels of oil were available. More could be discovered once ongoing exploration and drilling is complete.
A spokesperson for APA Corporation, Apache’s holding company, told fDi: “The Surinamese government has actively asked for input and demonstrated a willingness to develop the systems and processes to attract foreign investment.” TotalEnergies did not respond to a request for comment about if, and when, it will reach an FID on its offshore discoveries.
A number of services firms for the offshore industry have set up in Suriname amid growing demand from exploration and production companies. Kevin Peterson, CEO of CSA Ocean Sciences, a marine consultancy for the offshore energy sector which opened a Suriname office in October 2022, says there is a “substantial opportunity” for local and foreign businesses to serve demand.
“Only time will tell if Suriname oil and gas reserves will be as prolific as its neighbour [Guyana],” he says. But as the government looks to learn from and partner with neighbouring countries, it is keen to focus its efforts on attracting investment in other sectors like tourism, agriculture, fisheries, water supply and processing.
Mr Ramdin says that the country does not want to fall into the “Dutch Disease trap”, where rapid development of one sector leads to a decline in other sectors. “Investors should not look only at oil and gas, but the economy as a whole,” he says.
