— natural resources minister says policy alone won’t cut it

By Navendra Seoraj

GUYANESE have enjoyed immense benefits from its traditional economic sectors over the years, but a new entrant, in the form of oil and gas, presents new benefits, which Minister of Natural Resources, Vickram Bharrat, believes could be better accessed once there is proper local content legislation.
The lucrative oil and gas sector, which officially came on stream in 2015, has been productive, but there has been no regulatory/legal framework in place to guide the utilisation of local content in the sector.

The former A Partnership for National Unity and Alliance For Change (APNU+AFC) coalition had created a local content policy, after many consultations with various stakeholders.

It was reported that the policy framework recognises the broader goal of the previous administration to optimise national income from development of the country’s sovereign hydrocarbon resources and prudently invest these revenues to transform the economy to the benefit of all Guyanese, now and in the future.
The policy was designed to deliver both short-term opportunities for Guyanese citizens and Guyanese suppliers and longer-term capacity building by raising the standards of Guyanese industries to be internationally competitive.

Despite the aims and objectives of the policy, Minister Bharrat was of the firm view that a policy is not enough.
“The previous administration spoke about first oil; oil and gas, and all this talk about the industry and there is no local content legislation, no draft of it…. there is a local content policy but you need a legal framework to ensure that things happen,” said the minister during an exclusive interview with the Guyana Chronicle, on Thursday.
He said a policy is not enough to hold a major player or any player in the oil and gas sector accountable, as there is nothing binding or regulating their operations.
In further outlining his concerns, Minister Bharrat said: “We cannot go and tell the oil company ‘you supposed to give 10-20 per cent business to Guyanese companies….’ What is binding them to do that? There is nothing, there is no local content legislation, so we need to start working on that immediately.”
In the absence of a legal framework, there is no guarantee that Guyanese will enjoy the full benefits of the sector.

“Oil companies do not create big employment, they are big revenue earners, but the employment is not as big as the logging industry or GuySuCo… they do not employ that amount of people,” said Minister Bharrat, noting, however, that the employment comes from the spinoffs or subsidiary industries.

MUST BE IMPLEMENTED
Vice-President, Bharrat Jagdeo, during his days as Leader of the Opposition, had said for Guyanese to truly benefit from the oil and gas sector, legislation must be implemented to effect mandatory local involvement, not a policy.

He was reported as saying: “We have to have legislation. The legislation is what matters, not the policy. People can ignore that because it has no effect of law. When you pass the legislation – and we’re going to do it – you have to simplify it: what is it that we’re looking for from these oil companies to do? First of all, to make sure that they spend more in Guyana, using Guyanese labour and using Guyanese businesses. More business has to flow to our people that are the purpose of local content policy. It’s a simple thing,”

Jagdeo said that in order to craft a robust piece of legislation, the government must bring all the “local people” together and examine where there is the capacity and where there is none. By examining which sectors lack the capacity, only then can the government be “liberal” in allowing foreign investors to operate.
To this end, Jagdeo, at a press briefing on Friday, said President Irfaan Ali will be engaging persons from across the country, on local content and how it could benefit them.

WELCOMED MOVE
The Georgetown Chamber of Commerce & Industry (GCCI) and the Guyana Manufacturing & Services Association (GMSA) have since welcomed government’s position on local content and looks forward to the establishment of a framework to maximise opportunities for Guyanese businesses in the oil and gas sector.
GCCI and GMSA said they look forward to working with government in the development of the framework which will benefit Guyanese businesses and aid in the development of the private sector of Guyana.

Although there is no local content legislation, one of the key players in the sector, ExxonMobil, was reported to have spent over G$14 billion in the first half of 2020, and has utilised more than 600 Guyanese suppliers for services ranging from foodstuff to engineering.

Guyana Chronicle reported that ExxonMobil trained more than 50 Guyanese in countries such as Brazil, Canada, Singapore, Trinidad, United Arab Emirates and the United States, to gain hands-on oil and gas experience to leverage in Guyana.

According to ExxonMobil’s Public and Government Affairs Adviser, Janelle Persaud, more than 2,000 Guyanese are supporting ExxonMobil Guyana’s operations, representing 55 per cent of the total workforce.

ExxonMobil Guyana’s direct workforce now stands at 155, more than 50 per cent of which are Guyanese.
She noted that capacity building is an ongoing process for ExxonMobil Guyana and its direct contractors, with more than 100,000 hours of training provided to Guyanese staff as of the first half of 2020.

Persaud said approximately 80 per cent was in the areas of professional/technical and craft/trade training.
ExxonMobil is now firmly established in Guyana, operating an office in Georgetown, with numerous ongoing exploration and development operations offshore. ExxonMobil Guyana has made 16 discoveries since May 2015 and began production in December 2019 from the Liza Phase 1 development project.