Staatsolie Maatschappij Suriname N.V., a state-owned oil and gas entity, entered into a Letter of Agreement (LoA) with PETRONAS and ExxonMobil on March 4, 2024. This LoA marks a significant milestone in the ongoing exploration of the natural gas discovery identified in 2020 with the Sloanea-1 exploration well in Block 52.

In 2020, PETRONAS uncovered a natural gas reservoir in Block 52, located offshore Suriname. Initially, the size of the discovery was considered small and lacked commercial appeal for development into a production field. Developing an offshore gas field presents formidable technical and economic challenges compared to an offshore oil field. However, despite these complexities, Staatsolie and PETRONAS engaged in extensive discussions over the past few years to deepen their understanding of the Sloanea-1 natural gas find. These discussions culminated in the signing of the LoA.

The LoA serves as a foundational document outlining the agreements, principles, and conditions necessary to facilitate further exploration and assess the feasibility of developing a commercially viable natural gas field in Block 52. It sets the stage for subsequent negotiations to introduce an additional agreement, referred to as a 'Gas Addendum,' into the existing production sharing contract (PSC) for Block 52, which was originally signed in April 2013. The PSC contains detailed provisions primarily focused on transitioning an oil discovery into a production field.

Under the terms of the PSC, in the event of a natural gas discovery, it becomes imperative to negotiate a 'Gas Addendum.' This supplemental agreement to the production sharing contract will establish the procedures and terms governing how Block 52 partners PETRONAS and ExxonMobil can evaluate, develop, and exploit the natural gas discovery.

PETRONAS is scheduled to initiate drilling of the Sloanea-2 appraisal well in April 2024, with plans for subsequent production testing. The drilling rig, presently involved in drilling the Fusaea-1 exploration well in Block 52, initiated drilling the initial segment of the Sloanea-2 well in February.

For PETRONAS and ExxonMobil, the LoA represents a crucial step forward in advancing the Sloanea-2 well. Upon completion of drilling and appraisal activities for Sloanea-2, a determination will be made regarding the feasibility of establishing a commercial gas field. If deemed viable, the earliest commencement of natural gas production is anticipated around 2031, accounting for the construction timeline of production facilities. A potential commercial natural gas field would be developed through an "FLNG project," wherein gas extraction takes place from a floating production platform, followed by liquefaction and storage for transportation via gas tankers.