Majors are eying Suriname as the next big oil player. With recent success in neighbouring Guyana, Suriname offers hope for low-cost oil exploration and production going into 2021.    Exxon Mobil, Royal Dutch Shell, Total, Apache are all showing interest in the South American state, hoping Suriname will  provide oil for as little as $30 to $40 a barrel  thanks to lower production costs. This is well below the average US production cost of almost $50 per barrel.

After years of political unrest, Suriname is eager to make a name for itself in the oil world and encourage economic stability and growth. 

Attracting oil investment from foreign companies only became possible after the successful discovery of oil in deep wells in 2015, following around 60 years of failure in shallow waters.

To encourage investment, Suriname is offering companies 30-year production-sharing agreements, around 10 years longer than those of Latin America&rsquo s other oil-rich countries. Following a difficult 2020, emerging oil states such as Suriname and Guyana are expected to dominate licensing rounds this year with such attractive terms.  Oil experts believe there to be at least three to four billion barrels of reserves in Suriname&rsquo s waters.

Implication: More biz opportunities for Keppel OM and Sembmarine. Keppel OM and Dyna mac is doing the top side integration for the LIza FPSO for SBM offshore, scheduled to start work in Guyana in 2022. The theme for offshore oil and gas development is deeper, colder and harsher. Projects are going to cost much more a piece for deeper, colder and harsher waters. Much more planning and engineering work is required.

That' s why CEO Wong said: We  made further progress as a contender for big, high-value offshore projects, with more oil and gas exploration and production now taking place in deeper, harsher and colder environments. We are currently in talks for several such opportunities, having engaged these prospects early in the project life-cycle with solutions that optimise project execution as well as safety and efficiency in post-delivery field operations. We believe the more exacting technical requirements play to our strengths, but will require longer planning and development durations before the projects are awarded.  Our strategy of embracing new innovation and technologies, and developing future-ready capabilities and solutions, means that certain functions like engineering are becoming fixed costs. But the investment will boost our ability to cater for our customers&rsquo increasingly complex field developments

Sembmarine' s rebranding strategy of focusing to be an integrated player is to compete with the offshore middle man like SBM offshore, Subsea 7 and malaysia stock market darling Yinson. These middleman offshore players have sliced much profit from Keppel and SMM and their share prices have done very well over the past years. It is time for Singapre to take some back while we still have the technological advantage.

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