Exxon’s licence should mandate joint ventures with local companies - businesses urge

Exxon’s licence should mandate joint ventures with local companies – businesses urge

Jun 12, 2017 News

With Government announcing that it is preparing to issue a production licence to ExxonMobil shortly, local companies have upped the pressure on Government to ensure that the critical component of local input is mandated when operations start in 2020.
Already, on June 16, at the Pegasus Hotel, Kingston, a key forum has been arranged by the Guyana Oil and Gas Association Inc., to talk about the necessity of involving local content.
The advocacy body, which was established last year, has engaged prominent law lecturer, Alicia Elias-Roberts, of the University of the West Indies, Trinidad campus, to make presentations to the stakeholders. It is expected to attract high interest.
The event will come at a time when the debate is underway about the role to be played by businesses in the oil operations.
The public presentation by the Trinidad official will center on “The Development and Implementation of Local Content in the Energy Sector”.
It will also come at a time when a large delegation from oil-rich Trinidad and Tobago was set to arrive this past weekend to meet with Government, with the aim of benefitting from the off-shore oil operation, that is to be located about 100 miles from the shores of Guyana.
Trinidad is facing difficult times with its oil industry, following a hurting drop in world prices in the last few years.
A foothold in Guyana is being seen as a boon to their recent dismal performance with PetroTrin, a state-owned refinery which is facing tough times.
Companies there, involved in logistical and other support services, have been looking to diversify.
Already, Trinidad has offered to help refine the oil from Guyana.
The Government of Guyana has been plugging local content as an integral part of its negotiations with ExxonMobil, but it has not said openly how much this would be.
While Guyana has little experience in oil, a large number of its businesses have been engaged in the logistical business, especially in the gold mining sector.
Many of them have built up assets including specialized heavy duty equipment.
A number of businesses, including from the mining, banking and shipping sector, have made proposals to Government to build an on-shore facility at Crab Island, East Bank Berbice.
That area has been advertised by the administration as a proposed site that will offer on-shore services and other support critical to the operations of the floating operations that ExxonMobil has announced that it will build. The value of that investment is tagged at US$500M and would have been coming from a mix of local businesses, government and other investors in what has been described as a public/private partnership arrangement.
In the last few days, with the announcement of a production licence, a number of local companies have been urging that the administration make local content a top priority in the licensing stage of the oil operations.
Government has already said that it is working on a local content policy.
“It should be recognized that with the Trinidad downturn- the government must guard against us being swamped by any foreign companies. The whole idea is that we have to have local businesses benefitting because the specialized services that Exxon will be needing will not see many Guyanese on board the rig,” a local spokesman of a major company said yesterday.
Many of the companies are unwilling to speak on record as they have submitted proposals to government for the on-shore site, among other things.
“Guyanese companies don’t want handouts. But we do have resources and plenty of workers who have experience in logistics. We have technical help that we are tapping into. In the entire scheme of things, this is where Guyana should insist on heading…more local input. That is all we asking. We are building capacity and we are more than willing to have Exxon work with us to make it happen.”
Exxon has drilled a number of wells and have confirmed that the find is significant, with more than 1.4B barrels of high quality in the concession area.
The US exploration company has moved ahead to order equipment and issue contracts for the 2020 start.
Guyana is to receive a two percent royalty and split the proceeds 50/50. but after Exxon would have deducted expenses and its investments.

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Exxon’s licence should mandate joint ventures with local companies – businesses urge

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