Tullow Oil is to spend up to $8.5 million (€6.5 million) on its first drilling programme in South America.
The company has signed a production sharing agreement with Suriname's government-owned Staatsolie oil business and one of its subsidiaries, Paradise Oil. Tullow is acquiring a 40 per cent stake in the joint venture.
The deal involves two on-shore blocks - one is situated close to a field that is already in production. Tullow Oil's regional exploration manager for the Americas and Asia, John McKenna, said in a statement that it should come as "no surprise" that Suriname is an area of interest for the company. Suriname is in the northern part of South America, and Mr McKenna said that exploration of the area is a "logical step" for Tullow Oil following its expansion in Africa.
Suriname's Staatsolie increased its oil production last year by 10 per cent to 4.8 million barrels. It reported turnover of $270 million (€205 million).
Tullow Oil yesterday released an update from its exploration partner in Uganda, saying it is preparing to test deeper intervals in the Kingfisher 1A exploration well.
Analysts highlighted the fact that testing at this level implied that the target depth had not been reached with the existing equipment and that a more powerful drilling unit would likely now be required.
The shares fell 7 cent, or 1.2 per cent, to close at €5.87.
