Suriname’s recently announced new open-door policy for licensing is expected to encourage further exploration and developments in its hydrocarbon sector, according to a new report by GlobalData.
The favourable policy has been adopted after a dismal 2014/2015 licensing round, which saw just a single block sold.
The new licensing policy for onshore and offshore oil and gas blocks will be an addition to South America’s already attractive fiscal terms.
The report, titled ‘Suriname Upstream Fiscal and Regulatory Report – Open Door Licensing Adds Flexibility to Attractive Regime‘, mentions how investors will benefit from the new policy while negotiating contracts depending on different situations such as low prices or a complex development.
Allowing engineering and procurement (E&P) companies to capitalise on major events such as a sizeable discovery, the new policy will enable businesses with ready cash to proceed with operations without awaiting periodic licensing round.
Companies interested in exploration and development in Suriname will now be able to negotiate for higher cost recovery limits to achieve greater paybacks and reduce risk. The 2015 licensing round witnessed an increase of up to 80% in the cost recovery limit compared to the earlier 70%. Negotiations under the new policy are expected to be further improved with passing time, as highlighted by the report.
Suriname’s hydrocarbon sector is still in nascent stages even though discoveries were made as early as 1960s. Low prices and high risk associated with exploration have slowed the growth even as the nation’s attractive fiscal policies have continued to attract the interest of E&P companies.
According to GlobalData’s analysis, Fiscal terms are expected to remain favourable and unchanged in the near future as the country aims to increase investments by drawing more investors.
