Understanding Energy | GIPEX highlights local content progress

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AT last week’s 2nd annual Guyana International Petroleum Summit and Exhibition (GIPEX), local content was a focus for many of the hundreds of businesses, officials and private citizens in attendance.

Guyana’s Draft Local-Content Policy is expected to be finalised as early as the end of 2019, but Energy Department Director Dr. Mark Bynoe warned against a one-size-fits-all approach and noted that local content policies need to be carefully tailored and take into consideration the circumstances in Guyana in order to achieve the desired effects without adverse consequences.

Many speakers cautioned against overly unrealistic national content demands, especially at a time when many local companies are succeeding and finding work in the industry without a formal policy. Already, more than 3,400 people are working to support the oil-drilling projects in the offshore Stabroek Block. The operator of the project, ExxonMobil, estimated that half of those employees are Guyanese.

Several of the speakers from Africa, particularly Sierra Leone, warned the Guyanese government against forcing local content prematurely and requiring “local” in situations where there local companies or experts are not yet ready to specialize supply needs of oil production. Of course, with time and training and capacity building, these local companies will be able to meet the needs of the industry.

Officials from Ghana, another new oil producer and a frequently referenced example for Guyana, described their own problems with tailoring policies to fit real-world conditions and requirements. The CEO of Africa Energy Consortium, Ghanaian lawyer, Kwame Jantuah, highlighted the highly specialized needs of the industry and how difficult they can be to meet locally.

“What we didn’t understand was that welding and fabrication in the oil industry was totally different from normal welding and fabrication, and these had to be trained specifically for the industry,” he told attendees. Jantuah was highlighting a well-recognized problem in the industry—requiring high local content rates may sound good on paper, but can often make procuring the right specialized materials and technical experts difficult.

Ghana implemented its famously strict local content policy after major finds at the Jubilee Field in 2007, but there has been rising concern in Ghana that an overly strict policy has hampered development and encouraged corruption since few Ghanaian companies were capable of filling highly specialized roles such a short time after the industry began in the country. Brazil, too, has faced scrutiny after tight local content requirements had undesirable results, including increased project costs and effects on the pace of development.

Dr. Bynoe spoke at length to attendees and reporters about how capacity building can help raise the capabilities of local companies and job-seekers to help alleviate this problem and fill the many positions available within the oil and gas industry. But he warned that short-term and long-term opportunities will be very different as the industry shifts from an early phase that requires manpower and basic skills to a later phase that will require advanced and highly technical skills for production.

Industry executives highlighted the need for a full spectrum of workers, from accountants and lawyers to environmental monitors to drillers and technicians.
Many companies are investing aggressively in building the local knowledge base needed to fill positions now and in the future. Dr. Bynoe also acknowledged an ongoing collaboration between Exxon, the Council for Technical and Vocational Education and Training (TVET) and the Board of Industrial Training (BIT) aimed at skills training for youths.

Companies like Exxon also noted ongoing training programmes for Guyanese in Canada, Singapore and the U.S. for jobs in operations and maintenance, safety, and apprenticeships on FPSO production vessels like the Liza Destiny. Jantauh lauded the goal of building local capabilities based on Ghana’s own experience, telling attendees, “Don’t think money; think quality of product, because a good product will bring the money in and make one competitive.”