Unrealistic local content targets can have negative consequences – Exxon

— says its local content strategy largely aligns with gov’t draft policy

As the Guyana Government pushes to have a Local Content Policy (LCP) that will see Guyanese to play a greater role in the advancement of the petroleum sector, United States oil major ExxonMobil has cautioned that unrealistic local content targets are can have negative consequences.

This is according to President of ExxonMobil Guyana, Alistair Routledge.
Guyana recently concluded its consultation phase on the revised draft Local Content Policy and invited stakeholders to submit their comments and feedback on the document. In a statement on Thursday, the U.S. oil giant said it has made submissions the government, reaffirming its commitment to implementing effective initiatives to help build a globally competitive workforce and supply base.
Routledge pointed out in the missive that when driving local content in one sector, it is essential that actual and projected national capacity is taken into consideration to avoid negatively impacting other sectors of the economy.
“Prior experience around the globe demonstrates that overly aggressive local content regulations and mandates can have unintended, negative consequences on the development of projects, industry, and the broader economy,” the ExxonMobil Guyana President posited.
Similar sentiments were expressed by the oil company’s Local Content Advisor, Devon Seeram, who pointed out that legislations and regulations must be flexible to evolve with such an evolving economy.
He noted, “We are working together with the govt to ensure that the policy that’s enacted continues this growth rather than inadvertently stifle the growth. We have key concerns about unrealistic targets in the legislation.”
According to Seeram, companies in the oil and gas supply chain have doubled in the past three years. He added that Exxon works closely with its prime contractors to ensure that they are equally committed to developing local content and tracks that their local content plans are effectively implemented.
“[We] submit local content plans annually which detail how each company plans to develop and utilize qualified Guyanese nationals and suppliers for the upcoming year,” he said.
Seeram further outlined that where appropriate, these plans also include a three-year outlook of planned workforce as well as business opportunities that are published via the Centre for local business development’s supplier registration quota. This way, Guyanese companies can prepare to tap into the opportunities.
In addition to this, ExxonMobil and its contractors are also obligated to do robust quarterly reporting as a method of monitoring and evaluating the progress made regarding local content against objectives outlined in the plans submitted.
“Since our first discovery in 2015, we have made significant progress creating jobs, growing the number of local suppliers we work with and increasing our local spending… Guyanese businesses and ExxonMobil have succeeded in building local content together, and we believe that additional progress is both possible and necessary as the oil and gas sector continues to grow,” Seeram stressed in the missive.
Meanwhile, Routledge went onto point out that ExxonMobil Guyana has not only made significant process on local content but has exceeded expectations in this regard.
It was noted that the total Guyanese workforce supporting Exxon’s overall operation is more than 2,300, while in excess of $77.6 billion has been spent directly on over 800 Guyanese companies for goods and services ranging from food to engineering.
Nevertheless, Thursday’s statement outlined that ExxonMobil Guyana’s progress is aligned with the strategic objectives of the government’s Local Content Policy.
“We are committed to growing local content that will generate broad and sustainable economic development while supporting safe development of the nation’s oil and gas resources… We are pleased that the government continues to seek broad input and collaboration to develop an approach suited to Guyana’s unique situation and national development objectives,” said the ExxonMobil Guyana President.
Routledge added that, “Local content policy or legislation should be informed and supported by appropriate economic, labour and industrial baseline studies.”
The revised policy document seeks to put into context the current and evolving state of Guyana’s oil and gas sector, and to enable an improved level of local business participation therein through addition of value, access to opportunities, and capacity building for Guyanese within the energy sector.
The Natural Resources Ministry in a recent missive disclosed that the consultations over the past three weeks have seen more than 180 public and private sector agencies involved directly or indirectly in the growth and development of Guyana’s hydrocarbon sector were facilitated.
Among the key objectives of the Local Content Policy are to enhance the skills and competencies of Guyanese citizens; promote maximum use of Guyanese in the petroleum sector workforce; maximise the use of locally sourced goods and services in the petroleum sector; enhance the capacity of Guyanese businesses and supply chains to become internationally competitive; enhance and make world-class the training, technology, innovation and research and development base of Guyana just to scratch the surface.