🛢️ Suriname and TotalEnergies anxious about FID

Happy Monday!

This week we cover TotalEnergies’ upcoming FID in Suriname’s Block 58, developments in the exchange rates in Suriname, and upcoming price hikes at Suriname’s National Energy Company.

TotalEnergies wants to control costs; the Suriname project may be delayed.

• TotalEnergies is considering postponing the first oil development in Suriname's Block 58 due to cost considerations, as stated by CEO Patrick Pouyanne during an earnings call.

• Pouyanne emphasized the importance of controlling costs and prioritizing value over volume, learning from past mistakes in 2010.

• The company will proceed with four projects, including Sépia 2, Atapu 2, Suriname, and Kaminho, while evaluating various options.

• TotalEnergies expects to submit a development plan to the Surinamese government by year-end, with development studies underway, targeting the first oil production by 2028.

• The company's investment in Block 58, with significant discoveries in Sapakara South and Krabdagu, involves a $9 billion plan for development, utilizing FPSO technology with a capacity of 200,000 barrels a day.

Staatsolie responds publicly.

• Staatsolie sees no reason to delay developments in Block 58.

• Staatsolie Maatschappij Suriname NV supports TotalEnergies' timeline for the first offshore project in Suriname's Block 58, with options to accelerate development and control costs.

• TotalEnergies' CEO Patrick Pouyanné's comments highlight the project's importance, aiming for approval by the end of 2024.

• TotalEnergies and Staatsolie are committed to fast-tracking the Block 58 project, with efforts focused on meeting the 2028 first oil production target.

• Staatsolie will keep stakeholders informed of any developments deviating from the agreed timeline.

Exchange rates in Suriname dropped dramatically, and are currently rising again.

• Prices in Suriname's shops remain high despite falling exchange rates at the cambio (exchange offices)and slightly lower Central Bank quotations.

• On social media, many voice their complaints that the rates advertised at Cambios are not available when purchasing foreign currency, only when selling foreign currency leading many to believe these rates are artificial.

• The customs (douane) rate, currently at SRD 36.61, determines import goods prices, alongside dredging and increased container costs due to geopolitical conflicts.

• Minister Rishma Kuldipsingh of Economic Affairs explains that despite falling cambio rates, prices won't immediately drop due to surplus currency.

• Customs rates, quoted every two weeks, are based on Central Bank quotations, affecting the price list of basic goods.

• Recent declines in exchange rates prompt measures in public finances to control money supply growth, overseen by the CBvS and the Ministry of Finance.

• Policy measures, including the Price Stabilization Platform, aim to prevent rapid price fluctuations, with ample foreign currency supply mitigating risks of sharp increases.

Meanwhile, inflation has dropped below 30% after four years.

• The General Bureau of Statistics records a rate of 29% in January 2024 compared to January 2023.

• The decline in inflation is attributed partly to a slightly downward trend in currency depreciation, with inflation in 2023 being 18 percentage points lower than in previous years.

• Stability in the exchange rate for several months has contributed to the decrease in inflation.

• Suriname's consumer price index (CPI) includes 316 items measured at approximately 630 points across various regions, excluding Marowijne, Brokopondo, and Sipaliwini where prices are significantly higher.

• The CPI measures the average change in the price of consumer goods and services, maintaining fixed standards of quality and quantity.

Upcoming energy price hikes discussed in government.

• The government plans to propose a council decision for the gradual phase-out of energy subsidies, involving the Minister of Natural Resources and coordinated by a cluster team of ministries.

• Consultations will be held with Energy Companies Suriname (EBS) and the Energy Authority of Suriname (EAS) to present a new subsidy proposal, aiming for an integrated approach to smooth transition.

• Challenges in the energy sector include lower hydropower production due to ongoing drought, leading to increased reliance on more expensive thermal energy.

• Electricity in Suriname has been heavily subsidized, with rates significantly lower than in neighboring countries, placing strain on the national budget and limiting resources for other policy areas.

• The government acknowledges the need for a phased subsidy reduction, prioritizing continuous electricity supply, protection of vulnerable groups, and gradual transition to avoid inflation shocks.

• Stakeholder consultations, including with trade unions and consumer associations, will precede the phased subsidy reduction, aiming for feasible solutions across all sectors of society.

• Benefits of the transition include a fairer system, improved energy efficiency, enhanced social policy budget, financial independence for EBS, and macroeconomic stability.

• Opposition factions have requested an urgent public meeting regarding the impending electricity rate increase, highlighting concerns and seeking further discussion.