The ripples of the War in Ukraine are hitting global energy markets: Europe increased its liquified natural gas imports by 86% between June and August 2022. On the other side of the Atlantic, countries such as Suriname – with vast untapped gas reserves – have seen an opportunity to attract foreign investors to develop their natural gas reserves for export.
On the first week of August, Firebird LNG, a joint venture between the US Phoenix Development Holding Company LLP and MAD Energy LP, announced the full funding development site in Nickerie, Suriname. The plant will mainly cater to platforms in the territorial waters of Suriname and Guyana and it is expected to be operational by the end of 2024.
An energy consultant in Suriname had some reservations, “The Firebird LNG project is a kind of a mystery in Suriname. In particular, the company seems very confident in their proposed investments and timeline but we don’t know where the gas will come from for at least five to ten years. It can’t be from Total’s offshore oil discoveries, Total haven’t even made a final investment decision (“FID”) yet so oil production is at least five years away and even longer for the associated gas. Maybe it will come from Guyana? But they’ve only just started their gas to shore project.”
“The Firebird LNG project is a king of a mystery in Suriname. In particular, the company seems very confident in their proposed investments and timeline but we don’t know where the gas will come from.”
Energy consultant, Suriname
The main challenge for the company will be to ensure access to gas – the main reason why it plans to build an offshore natural gas transportation system and a liquefaction plant. An energy industry executive in Suriname saw many issues, “Cross-border collaboration and access to the gas are the most significant challenges for Firebird but others exist, for example, Suriname uses Dutch law which is very pro-labour and anti-business and there are also exchange controls in place so you can’t easily repatriate profits.”
Following Firebird LNG’s example initiatives in Suriname, energy companies interested in investing in the country need to understand the regulatory needs and commercial interest of building greenfield LNG plants in the region. Although the Guayana-Suriname basin has substantial gas resources, the lack of infrastructure in the two countries limits the development of new plants. The industry consultant affirmed, “The industry needs the infrastructure first. Right now, the focus is on the construction of a brand-new harbour to support offshore activities related to oil production. Gas will come later and LNG facilities after that.”
“The industry needs the infrastructure first. Right now, the focus is on the construction of a brand-new harbour to support offshore activities related to oil production. Gas will come later.”
Energy consultant, Suriname
Furthermore, financing capital-intensive projects like LNG plants require long-term commercially stable contracts with potential clients, mostly upstream companies. TotalEnergies and ExxonMobile are the main oil companies operating in Suriname and Guyana respectively but they are not talking about LNG as a priority, yet.
In summary, there is plenty of opportunities in the Suriname basin but a healthy dose of realism is needed when it comes to the timescales involved in building out an LNG industry. As the industry consultant concludes, “The government in Suriname is really trying to develop gas resources as fast as they can, but there are limitations in terms of infrastructure and the capacity to develop incentives or policies to speed up the process.”