Changing country’s approach to oil and gas to benefit Guyanese
Dear Editor,
Our newly-elected People’s Progressive Party/Civic (PPP/C) government now firmly in place following five months of vote- re-counting controversy, Our President Irfaan Ali and his Vice President Bharrat Jagdeo have recently turned the discussion over the country’s offshore oil developments to proposals to require oil and gas operators to invest in local content as a part of their ongoing license to operate.
“We are sticking to our commitment in ensuring that the industry as far as possible, provides opportunities for not only the local private sector but Guyanese as a whole here and in the diaspora, wherever the skillset is,” Ali told local media on Tuesday.
The Energy Department of the previous Government led by President David Granger developed a plan for local content over the past year, but the country’s Parliament was not able to agree to legislation implementing its provisions in the midst of the election and its aftermath. Early this week, Vice President Jagdeo said he had retained Trinidadian local content expert Anthony Paul to advise the administration on how to move ahead in this area. Mr. Paul has consulted on previous efforts by the Granger government to develop local content policy, and has also helped develop similar plans for Ghana and other countries. Local content, which governs processes for training and hiring local workers and establishing preferences for the acquisition and use of locally-made goods and equipment, is a standard and key part of any international oil and gas-related development. The key to an effective local content plan is to strike a balance that provides for proper benefits to the host country, its workers and business community, while also ensuring it does not inhibit the efficient development of the resource. It is clear that many of our local workers working in the oil industry are being underpaid. This is crucial, since the revenue sharing agreement governing distribution of proceeds from the production and sale of the oil and gas should benefit all parties. It is obviously any local content plan that results in further delays or requirements for operators to hire unqualified or poorly-trained workers simply to meet artificial quotas could further erode the revenue-sharing benefits to the Guyanese Government and people.
Again, striking the right balance is key. It should be noted that the Consortium has not been sitting still where local content is concerned, despite the lack of a formally-approved government plan. At an August 12 press conference, ExxonMobil detailed over US$67 million in local content investments the Consortium has made just during the first half of 2020. Those investments include:100,000 hours of training provided to Guyanese staff; an in-country ExxonMobil direct workforce that is more than 50% Guyanese nationals; an indirect workforce of more than 3,500 employees, again made up of more than 50% local citizens; goods and services purchased from more than 600 Guyanese suppliers; the international training of more than 50 Guyanese during Q1 2020, providing hands-on oil and gas experience to leverage in Guyana.
So a lot has already been done; however, it is not enough, the key for any plan governing future required investments is to ensure the striking of a proper balance. Local content is important, and certainly our Government’s desire for a workable plan that provides certainty is perfectly reasonable. But everyone involved should take a personal stake in ensuring that any final plan’s requirements do not become so stringent that they interfere with the efficient development of the resource.
Recently scores of oil and gas representatives met virtually to discuss the opportunities available to supply chain companies in Guyana, the direct message is oil is going to change Guyana beyond all recognition, and it is true that our Government is keen to ensure that Guyana benefits from its vast oil reserves, and supply chain companies will have to bear that in mind.
“Oil will provide the funding needed to expand infrastructure, and there’s been recent commentary in the press here about a gas-to-energy power station to improve the lot of each and every citizen. “The Government and the people of Guyana will also want to see more local investment and more jobs being created by any outside investor.
“The bottom line, we want to see Guyanese benefitting from any outside investment. If a business wants to succeed here, they need to put in significant effort building links and partnerships with local firms. The importance of benefiting the local population and ensuring as much money as possible stays in Guyana will be at the forefront of the mind of this Government.
“If anyone thinks they can come to Guyana, do work and repatriate all of their earnings back to their country, that is not how this new Government wants to work, and that will not be successful.”
Our newly elected Government of Guyana says it is seeking to change the country’s approach to oil and gas by ensuring benefits to every Guyanese from the offshore resources are maximized. The aim is to strike a balance between the country’s interest and that of the investors, who have been plugging billions of dollars up front into offshore exploration and development activities.
