– major oilfield service providers ‘migrating’ to Guyana

By Navendra Seoraj
SEEN as the new investment capital of the Region, Guyana, a fledgling petroleum state, is fast becoming a magnet for major investors in the oil and gas sector, attracting even some Fortune 500 companies which have started to ‘migrate’ here from Brazil and Trinidad and Tobago.
With a projected Gross Domestic Product (GDP) growth of 26.2 per cent for 2020, Guyana, being one of the only countries in this hemisphere expected to see positive growth, is seen as the ideal investment destination.

It was already reported that the Government of Guyana is actively encouraging Foreign Direct Investment (FDI) and offering tax concessions for priority projects through its Guyana Office for Investment (Go-Invest).

“Already, a lot of current foreign direct investors are expanding their services to Guyana… they are even moving their headquarters to this country… these are being moved from Trinidad and Tobago, and even Brazil, to Guyana,” said Chief Executive Officer (CEO) of Go-Invest, Dr. Peter Ramsaroop, during an exclusive interview with the Guyana Chronicle on Wednesday.
Most of these companies are focused on offering oilfield support services to the offshore operations in the oil and gas sector.
Oil and gas services are considered to be a supportive part for the oil exploration and production companies. They are services that include oil well maintenance, completion, production, supply, and logistical support services in both onshore and offshore activities.

These services will be offered directly to ExxonMobil, the company operating in the Stabroek, Canje and Kaieteur Blocks, offshore Guyana.
Some 18 discoveries have so far been made in the Stabroek Block since 2015, but just three projects have so far been sanctioned – Liza One, Two and Payara. The operator, ExxonMobil, expects this to ramp up to around five by 2026, generating more than 750,000 barrels of oil per day. Since 2015, ExxonMobil has increased its estimated recoverable resource base in Guyana to more than eight billion oil-equivalent barrels.

Among some of the companies already servicing ExxonMobil’s operations are Schlumberger and Halliburton, both Fortune 500 companies.
While not referring specifically to those companies, Dr. Ramsaroop said existing service providers are moving their regional hub to Guyana. This, he said, will improve the country’s image, attract more major companies and create employment.

LOCAL CONTENT
The migration of such large companies is a positive sign for Guyana, and while acknowledging the benefits it would present to the country, Chairman of the Private Sector Commission (PSC), Nicholas Boyer, said local content must be promoted through joint ventures and partnerships with these major companies.
“We hope it is not what I would call a wholesale move, where companies think they will set up in Guyana without any sort of partnerships or joint ventures, or local content in their operations,” said Boyer.

Government has already initiated the process of crafting a comprehensive local content policy which will form the basis for local content legislation.
But even in the absence of a comprehensive policy, it has been reported that Guyanese businesses have been contributing to the oil and gas supply chain which includes services such as transportation and even professional services ranging from lawyers, accountants and even auditors.
It is also reported that ExxonMobil and its prime contractors have spent over $300 million with more than 700 local companies since 2015.
Also, more than 2,500 Guyanese companies are registered with the Centre for Local Business Development, which was founded by ExxonMobil and its partners in 2017, to build local business capacity to support global competitiveness.
A lot more investors are expected in the coming years, and Guyanese have been positioning themselves to capitalise on the imminent opportunities.

JOINT VENTURES
“We have seen a number of joint ventures becoming members of the various business service organisation… we have seen companies positively taking these steps,” said Boyer.
The idea of partnerships and joint ventures is also being encouraged by Go-Invest, said Dr. Ramsaroop, who added: “Our goal is to ensure we push local content and ensure that if a foreign investor comes here, we do our best to match them with a local provider.”

Vice-President, Bharrat Jagdeo, 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 is 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.