Dear Editor,
A FULL-PAGE advertisement in one local newspaper compared the cost, duties and taxes of a foreign and local company supplying a “pipeline” to ExxonMobil. The advertisement showed the foreign company not paying duties and taxes; however, duties and taxes were paid by the local company. If both companies are sub-contractors of Exxon, Hess and CNOOC, then neither foreign nor local company will be required to pay duties and taxes per the Production Sharing Contract (PSC) agreed by ExxonMobil, Hess, CNOOC and the Guyana Government; the advertisement is misleading.
Article 21 of the (PSC) addresses exemptions from duties, taxes, etc. for the contractor and

sub-contractors. Article 21 states that Exxon, Hess & CNOOC as well as their sub-contractors are exempt from duties and taxes for services and equipment provided in oil production. Article 21 does not say foreign sub-contractors are exempt from duties and taxes. Clearly, ExxonMobil, Hess and CNOOC local contractors are exempt from duties and taxes. How do critics read Article 21 and conclude local sub-contractors are required to pay duties and taxes?

The advertisement is not grounded in any reality. Let’s consider the advertisement’s example of supplying a “pipeline” to ExxonMobil. A new installation or maintenance pipe spool repair on the FPSO or subsea structure would be handled by sub-contractors SBM Offshore (FPSO owner) and a subsea installer(example TechnipFMC).

The sub-contractors would procure the pipe and fittings, not ExxonMobil as premised in the advertisement. With global business volume leverage, the supply chain management of these sub-contractors can negotiate better pricing and delivery than any local company. The cost to secure the pipe and fittings would be higher for the local company, this is not reflected in the advertisement. This will be the reality for procuring process-piping components & equipment, rotating equipment & parts, instrumentation & controls, water treatment and injection chemicals needed to produce crude oil offshore Guyana.

All Guyanese benefit when cost is minimized, and profit oil is maximized. A practical local content policy must also focus on maximising Guyana’s oil share from the production and not written to make a select few wealthy like Russian Oligarchs. The select few want the local content policy to mandate foreign companies partner with a local company if their operations are in Guyana. Should there be such a requirement, Trinidad & Tobago and Paramaribo would be the winners that’s where these businesses would be located.

The losers will be the Guyanese men and women who could have (or currently have) jobs as dock workers, drivers, welders, fitters, machinists, chemists, engineers, future millwrights, future mechanics, NDE technicians, future valve-repair technicians and future instrument technicians. Workers do not care if the businesses are foreign or local, they wish to have jobs so they can support their families.
Regards,
D.C. Daly