Staatsolie attracts exploration interest but no bids

Suriname's state oil firm Staatsolie did not receive any bids by the May 24 deadline on exploration contracts for 13 offshore blocks, but the promotion of the blocks has raised the country's profile, Staatsolie exploration and production contracts manager Marny Daal-Vogelland told BNamericas. "A lot of people came down and looked at data, but maybe they are waiting to get a better deal," Daal-Vogelland said. Interested companies said they required more information about the blocks and that the speculative seismic data available from Western Geco on six of the blocks was too expensive, she said. Two companies were interested in signing contracts but did not submit bids because they had not finished their evaluations by the deadline, which Staatsolie decided not to extend, she said. The bidding round was "for six months, which is enough time, and now there's no point it dragging things on further," she said. "It's difficult if you postpone it and still don't receive firm bids - it would have been a waste of time." "We think it's a pity it turned out this way but we still hope to get some results out of all the publicity given to these blocks," she said. The bidding round helped put Suriname on the portfolios of major oil companies, which may consider exploring there in future, she added. "This is a very new area, so we didn't think you'd get the same interest as in another area like [Brazil's] Campos basin, because there is little information. This is just the beginning of things to happen in the future," Daal-Vogelland said. Staatsolie expects that if Spain's Repsol YPF (NYSE: REP) and Danish oil company Maersk Oil, which recently signed exploration agreements for blocks 30 and 31 respectively, discover commercial quantities of hydrocarbons offshore, then other companies will be attracted to Suriname. Staatsolie has not yet decided how it will proceed in future in terms of offshore exploration, Daal-Vogelland said. Options under discussion include negotiating contracts directly with companies. Staatsolie is in "the early stages" of negotiating two contracts with two other companies, Daal-Vogelland said, "but we have to see how these things develop." Another option is for Staatsolie to do some offshore exploration work itself or in partnership with private oil companies. "That's one possibility we're seriously looking at, to continue on our own in exploration, because exploration is the more technically intensive part and the development is the more capital intensive part," she said. Staatsolie has an annual exploration budget of about US$4mn and the cost of seismic work on one offshore block is about US$3mn-5mn, so the company could explore some offshore blocks itself in the next few years, she said. The idea is for Staatsolie to take some of the exploration risk and then bring in foreign oil companies to do the development work. "Companies would like to share risk and that could make it a more attractive project," she said. "Ten or fifteen years ago no one believed there was oil in Suriname but we now have a successful onshore operation, so the next phase will be to prove that it can also be successful offshore," she said. Staatsolie currently produces about 12,000 barrels of oil a day, all of it onshore.