US and French companies to invest $10bn in oil extraction off coast of South America

The sojson-called GranMorgu project focuses on an offshore area believed to contain some 700 million barrels of oil

France's TotalEnergies and the American hydrocarbon heavyweight APA Corp. have unveiled plans to invest $10bn nto extracting oil off Suriname's coast, marking a historic investment for the South American nation, officials revealed on Tuesday.

The first drops of oil are expected by mid-2028, with a projected output of 220,000 barrels daily, shared TotalEnergies' chief Patrick Pouyanné, who jetted into Suriname to personally deliver news of the country's most significant investment yet. The GranMorgu project zeroes in on an offshore patch estimated to harbour around 700 million barrels of crude, sitting right next to an ExxonMobil success story in Guyanese waters.

"Today is a historic day for Suriname," beamed President Chan Santokhi, hailing it as "a day that will determine our future." TotalEnergies is set to join forces with APA Corp, the parent company of Apache Corporation, a Texas-based oil exploration titan, and Staatsolie, Suriname's state-run oil firm.

With plans to float bonds in 2025 to fund its slice of the venture, Staatsolie is eyeing a 20% share as per the production sharing agreement. The company secured an initial $175m payment and is now in talks with banks and planning a bond offer to complete a second payment, Jagesar said.

Santokhi has highlighted the expected revenue from the project as a catalyst for improving living standards in Suriname, where more than 640,000 people live with an 18% poverty rate, as per the Inter-American Development Bank. "This is a game-changer," he declared.

With Suriname saddled with $3.5bn debt and engaged in a three-year, $688 million IMF restructuring program that has led to austerity measures and sparked violent protests last year, the stakes are high. Annand Jagesar, CEO of Staatsolie, believes the oil exploration deal will transform Suriname, stating, "Suriname will never be the same."

However, he cautioned against potential governance issues, referencing Venezuela's economic struggles despite its abundant reserves, due to its failure to diversify and heavy reliance on oil.

TotalEnergies has committed to responsibly advancing its project, promising to employ cutting-edge technology to reduce greenhouse gas emissions.