Suriname is preparing for an unprecedented flow of "petrodollars" as the first oil is pumped from Block 58 later this decade. The GranMorgu project, a consortium of TotalEnergies (40 %), APA Corporation (40 %) and Staatsolie (20 %), has proven reserves of approximately 760 million barrels. With the floating production unit (FPSO) capable of processing up to 220,000 barrels per day, a new era will soon dawn.
Assuming an average production duration of twenty years and a conservative estimate of $20 billion in net revenue for the state, this means that each barrel extracted will net about $26. In the early years when many investment costs are still being recouped, Suriname will bring in about $860 million per year, rising to over US$1.5 billion around 2033 and then gradually declining to about $940 million in 2036.
Without careful management of this revenue, Suriname risks falling into the same trap as other commodity countries, during price increases the budget grows explosively, after which a decline in revenues leads to outstanding accounts. The Savings and Stabilization Fund Suriname (SSFS) must break this pattern. Part of the income in good years is set aside, so that in years with lower oil prices the treasury does not run dry. At the same time, the SSFS serves as an investment vehicle: petrodollars are channeled through strict budget rules to education, health care, agriculture, tourism and infrastructure.
The legal and institutional framework surrounding the fund is clearly defined in legislation and the State Budget. The Minister of Finance oversees every deposit and withdrawal, in cooperation with a specialized Oil & Gas Team Suriname within the Tax Administration. This unit modeled after the Netherlands' OLGA verifies that royalties (6.25 % of production), profit oil and taxes are remitted flawlessly.
To offset volatility, good governance also requires that a portion of the dollars be carefully invested in projects with lasting returns, schools that enable higher education, clinics that reduce health spending, irrigation systems that double agricultural production and roads that open up remote communities. In doing so, in addition to $26 state revenues, each barrel extracted can yield much more in terms of structural growth and poverty reduction.
GranMorgu is just the beginning because future FIDs for gas fields could even take annual revenues to $2 billion. But the key to success lies not only in the size of reserves or the level of cash flows, but in Suriname's ability to manage, save and strategically invest these resources so that the petrodollar is the foundation for sustainable prosperity, including for generations to come.
The Strategic Group on Oil and Gas Policy drafted the paper Suriname 2025 on (Presidential Decision), led by Wim Dwarkasing, Karel Eckhorst, Daniel Lachman and Marten Schalkwijk and together they have painted a beautiful picture of Suriname in 2050. This requires discipline and skill. And together with five working groups from education to laws and regulations, they developed this widely supported policy framework called Suriname 2050 that can serve as a blueprint for current and future governments. In future editions, I will explain their recommendations step by step so that all of Suriname fully embraces the vision.
