The Big Carrot

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The World Bank considers the South American country and former Dutch colony of Suriname to be an “upper middle-income” country due to its rich natural resources. But it noted that the country’s mining and other revenues declined in 2015, sparking a fiscal crisis that grew worse when the coronavirus pandemic struck. As a result, more than 17 percent of the country’s citizens lived in poverty in 2022.

A year later, tensions in the country exploded over the economic situation: In February 2023, protesters broke into the country’s legislature in the capital of Paramaribo after President Chan Santokhi agreed to implement austerity measures such as an end to fuel subsidies and tax hikes to comply with an International Monetary Fund loan agreement, World Politics Review explained.

Now new oil money might change that trajectory.

French oil giant TotalEnergies recently announced $3 billion in engineering contracts for the GranMorgu offshore drilling project that could tap more than 700 million barrels of oil with production scheduled from 2028, reported Reuters. These investments were part of TotalEnergies and American exploration firm APA’s $10.5 billion offshore drilling plan for GranMorgu, Suriname’s first such project.

In the local language Sranan Tongo, “GranMorgu” means “new dawn” and “Goliath grouper,” noted TotalEnergies in a statement that also promised a total of 6,000 new jobs for a country of about 600,000 people.

“Today is a historic day for Suriname,” said Chan in early October when the project was announced, the Associated Press reported. “This is a game-changer.”

Now the pressure is on the oil industry and Chan to demonstrate how regular people will benefit.

Suriname has around 2.4 billion barrels in reserves, noted OilPrice.com, leading observers to believe that the country can expect a windfall of cash like neighboring Guyana did after opening up oil fields to international drillers. Ratings agency Moody’s agreed, boosting Suriname’s credit rating on the promise of oil revenues, Bloomberg wrote.

The reality might not be so great, however. Analyst John Gerdes of Gerdes Energy Research told Barron’s that Suriname might have only a third as much oil production potential as Guyana, for example.

Some constituencies in Suriname also believe they are not set to benefit. For example, Suriname has one of the largest untouched rainforests in the world and is also the planet’s most densely forested country. But the country is the only one in South America that hasn’t recognized the land rights of Indigenous communities that want to protect the forest amid a logging boom, Mongabay reported.

How Chan distributes the new capital will be key. Meanwhile, some believe that while the Indigenous peoples of the country may not benefit from the oil boom, the forest actually might, wrote the Financial Times.

Officials in the country say the oil boom, ironically, presents an opportunity to jump-start demand for Suriname’s fledgling sovereign carbon credits scheme, which to date hasn’t been very successful, mainly because there aren’t many international companies operating in the country – yet.

The idea, possibly to be voted on in the legislature this fall, is to require all companies operating in Suriname to purchase its sovereign carbon credits so as to offset their in-country emissions. That money would go to its climate fund, mainly to protect its forest.

“We are following this mechanism in which we can receive climate finance through carbon credits – OK, we’re doing that, but it’s still not working,” Suriname’s minister of the environment, Marciano Dasai, told the newspaper. “But now, we have oil and gas.”