ExxonMobil must play greater role in developing local capacity – VP

…Govt looking to have draft local content legislation before year-end

Vice President Bharrat Jagdeo said that US oil giant, ExxonMobil, has to play a greater role in assisting Guyana to develop a core team of indigenous professionals to manage the local oil and gas sector.
Speaking on a local radio programme, “Guyana’s Oil and You”, Jagdeo pointed out that the People’s Progressive Party/Civic (PPP/C) Government intends to eventually move to a Petroleum Commission to overlook the sector and deal with all the technical issues in the contracts. This way, he explained, there will be less ministerial and political involvement.
However, Jagdeo noted that Guyana needs to have the capacity in key areas such as policy capability, enforcement and compliance capability as well as auditing capability to effectively manage the petroleum industry.
To this end, he said that Government wants to create “a core of Guyanese managers” – putting about 400 to 500 of the country’s youngest and brightest minds on scholarships, and/or training them.
As such, he noted that Exxon, Guyana’s largest operator offshore, must share the cost of this. Exxon along with its partners are operating in the Stabroek Block, where there are an estimated eight billion barrels of oil.
The Vice President posited that the paltry US$3000 that the company currently gives is not only insufficient generally but is not adequate for the training Guyana intends to undertake.
“Now the company pays millions of US dollars for its bureaucracy and we share half of the cost, that is, the cost oil. So now they too must provide enough funds for Guyana to build a great capacity, it’s own capacity, to monitor the sector,” he contended.
This, according to Jagdeo, will be good for the oil company as they will have a core of professionals to deal with since sometimes people without the necessary expertise can be unreasonable in negotiations.
“But if you have a good quality indigenous capacity, that is, Guyanese capacity… in the long run, it helps [the companies] to have qualified regulators… and we want our people to become the regulators in the future,” he asserted.
According to the Vice President, while Guyana can raise funds for this by way of grants and loans as well as securing experts to conduct training, the oil company should help to fund some of these costs too.
Meanwhile, Jagdeo said that the PPP/C Administration also intends to have a draft local content legislation in place by the end of the year.
“We are moving swiftly and we are hoping before the end of the year that we have a draft legislation that we can put before the Parliament to deal with local content and driving more business and jobs for our people,” he stated.
The Vice President said the PPP/C Government has already indicated to Exxon that it intends to pass a local content legislation that will force all oil companies to ensure that they address issues that are of pressing nature to the business community and Guyanese.
According to Jagdeo, they believe enough has not been done to allow Guyanese to benefit from the development that has taken place.
As such, the Government will be going to the people and engaging with stakeholders from the various sectors on the draft legislation. He said they will be setting up a working group to lead this initiative and has since reached out to some industry experts for assistance in crafting this legislation so that all Guyanese can benefit from the oil and gas sector.
Jagdeo noted that as it is, foreign companies benefit from duty-free concessions, thus putting local companies at an undue disadvantage to compete with them.
“This has to change… We have to fix this… Guyanese are doing the same job and they get less pay; that can’t happen in the future…,” he posited.
The Vice President noted that the local content legislation will not just apply to the major operators but also their subcontractors, who will have to comply with the provisions.
Moreover, he pointed out that the legislation will also ensure that Guyanese companies get the chance to also benefit from opportunities arising from the sector. He noted that there are local companies that can do some of the work that is contracted out to foreign companies.
“That has to change,” he insisted.
According to VP Jagdeo, while the PPP/C Administration wants oil companies in Guyana to prosper, Guyanese must also share that prosperity, and he noted that they will ensure this happens. (G8)