LAST week, the second annual staging of the Suriname Energy, Oil and Gas Summit brought together regional energy powerhouses Suriname, Trinidad and now Guyana, together with hundreds of participants and key speakers to discuss the state of Suriname’s energy economy.
Guyana’s success as a new energy producer was a major theme of the event with industry watchers offering comparisons between Guyana’s rapid growth in the sector and where Suriname is today.
Suriname has had a small amount of onshore oil production since 1982 and its national oil company (NOC), Staatsolie, is the official government entity responsible for much of the development of its oil resources.
Unlike Suriname, Guyana has only recently begun discussions and deliberations about forming a NOC. However, in the short period that Guyana has been an energy producing state, it has managed to implement policies and legislation that Suriname is only now considering, and we are already reaping the benefits of legislation such as the local content law and the sovereign wealth fund.
In December 2021, the Local Content Act and Natural Resources Fund Act were signed into law, just two years after first oil in 2019. The accelerated pace of development and legislation is a credit to the deliberative process undertaken by the government to seek input from the industry, from experts and countries like Ghana, which have all shared lessons that shaped Guyana’s legislative framework.
The Local Content Act has already allowed local companies to secure significant benefits from oil and gas, including procurement and capacity building opportunities for locals. Suriname is only now discussing implementing its own policy and Guyana’s early lessons will serve as a helpful tool in shaping their policy.
Guyana has much to celebrate. Guyana’s oil reserves have now far surpassed Suriname’s. By the end of this year, Guyana should also be producing roughly 20 times what Suriname produces annually.
Already, Guyanese companies owned and operated by local businessmen are providing higher value services to the oil and gas sector. This is due, in no small part, to planning around the needs of the oil sector and what competencies are needed to provide capacity and manpower within the local workforce.
Trinidad and Tobago’s Permanent Local Content Committee member Jemma Langley made a key point on a local content panel in this regard.
“These energy companies operate by competencies. So, you need to start mapping the competencies of the citizens. Based on that information, you then can plan for the long-term,” Langley said.
Guyana saw a rapid expansion of training opportunities and certification programmes for local companies early on through the industry-funded Centre for Local Business Development (CLBD), an initiative that has received praise regionally and locally.
The CLBD was operational in Guyana before first oil, helping companies align their operations with the services that would be needed in Guyana’s oil and gas sector. One prominent company that has benefitted from the CLBD’s expertise, Guyana Shore Base Inc., is already expanding operations and seeking local vendors that satisfy the 40 sectors outlined in the local content law. Additionally, ExxonMobil recently signed a contract with the Vreed-en-Hoop Shore Base Inc. to serve current and future developments.
Local companies are providing logistics and manpower services, amongst other skillsets and Suriname stands to benefit from Guyana’s growing expertise in this regard. While Suriname has been producing oil onshore for years, recent offshore discoveries have ballooned its oil reserves while simultaneously creating a complex issue of developing a labour market with the skills to meet the need. Crafting a local content policy to ensure maximum participation from Surinamese without holding development back will be critical for its long-term success.
Unlike Guyana, many analysts feel that Suriname’s Savings and Stability fund, in its current form, lacks the necessary safeguards to avoid the worst outcomes of the resource curse. Regional energy expert, Arthur Deakin, pointed this out in a 2021 opinion, calling on Suriname to “pass a new law creating a fund specifically for its oil resources that is professionally managed by an independent body with no political connections.”
Without a fully operational sovereign wealth fund, governments have tended to become overly dependent on inflows from natural resources without the planning and transparency in place to prevent graft, hyperinflation, and corruption. Guyana’s Natural Resource Fund is quickly approaching US$1 billion in deposits and will be a significant source of long-term revenue for generations.
Guyana’s success as a new producer was frequently mentioned at this conference and discussions among the three countries was positive. This summit and Guyana’s continued work with ExxonMobil and its partners is an example of how collaboration can encourage rapid development without compromising safety and respect for the environment.
Guyana has already avoided some of the pitfalls of other countries and has made strides to put Guyanese first through consistent investment in infrastructure development and other sectors that will support the local economy. Guyana’s path has been rocky at times, but it is a sign of success that a country that had no known oil resources just a few years ago is now a success story its neighbours are looking to emulate.