The contract pertaining to the extraction of oil and gas and development of the industry has the requirement of utilizing local content. This part of the contract is not being enforced. Guyana’s economy for now is tied to local content but gets miniscule amounts from it. Foreigners are the beneficiaries of local content. This needs change. President Ali announced appointment of a local content advisory panel to set policy on use and enforcement of local content. The development of the budding oil and gas industry needs a heavy dose of local content in Exxon’s extraction of the raw materials.
This year, some US $175 million in revenues is expected. Much more will come in 2021. And from 2022, it is expected to be in the billions. Guyana must prepare itself to establish oil and gas related industries to maximize benefits. For now, it must start with an effective enforceable local content policy and prepare the nation for local content.
In every country, government demands that oil companies use a minimum percentage of local content – staff, expertise, materials, etc. But Guyana has limited local content related to the oil industry; it lacks skilled personnel and does not produce goods used in the oil industry. Therefore, the country must prepare itself for local content by training skilled workers in the area and in establishing industries that would supply the oil companies. President Ali wisely appointed a local content panel last week to advise the government on local content policy. What does local content mean and how can the country benefit from local content?
Local content is not about providing sabji (vegetables or greens). Local content really has to do with the development of local skills, local technology transfer, and use of local personnel as well as local manufacturing for use in the oil and gas sector – for industrialization.
Local content is building a workforce to take over the management of the oil industry eventually towards complete ownership once the oil companies have recovered their costs and earned fair amount of revenues above and beyond their investment. All oil and gas producing countries have ‘local content’ requirement in agreements signed by MNCs into their regulatory frameworks. The objective is to create jobs, and train local for the jobs that require technical skills. Countries strategically direct local content to transfer technology into the country to accelerate industrial development. Guyana has no local skilled individuals in O&G. So we must train them.
In Guyana, the preceding government let the nation down in its handling of the oil and gas industry by not having stringent requirements and inclusion. Local content should have been specified as skills and management related, not purchasing louki (squash) or khela (banana). We have to think strategically for the future by training people for oil, not to supply pumpkin and payaya alone.
Guyana must look ahead with a development plan. We need a survey on our varied businesses to get a sense of what expertise is available locally and that supply local content to O&G and to push for their employment of our tens of thousands of unemployed. A survey is also needed on skills needed in the oil and gas industry, how many personnel are needed, and what training would be provided to them. After training, jobs can be obtained from the oil sector.
The previous regime did not seek the advice of specialists before signing a lopsided contract that did not adequately protect the patrimony of the nation. We were taken for a ride to enrich Exxon leaving fine change for Guyana that now President Ali is called upon to fix. The President has had a good start with the Payara Review and with local content appointments.I think we should give consideration to transforming the Port Mourant Training Center (PMTC) into a partial oil and gas institute to train skilled worker for the oil industry. We can twin it for oil and gas for the sugar factories. Such an institute should be a premier oil and gas institute in the region. I have some ideas and suggestions in this endeavour having engaged oil and gas experts while I spent time in India engaging in management at tertiary institutes. That PMTC provided skills to so many who went on to become first rate engineers in the UK, Canada, USA, and Trinidad and elsewhere earning triple digits US dollars salary. It can do the same for O&G. I am from Port Mourant and am familiar with the discipline and skills ingrained in those who were trained in the technical aspects of Guysuco factories. It would do same for our O&G. The institute can train people for local content participation – on land logistical management, EPA, health and safety, how to clean up oil spills, handle emergency, transportation logistics, food chain supply, and the technical aspects of drilling, piping, supplies, etc. There must also be training for locals in overall administrative aspects of O&G and on the wider scope of the industry.