Has Govt. secured ‘financial support’ for locals in ExxonMobil contract?

Nov 27, 2017 ExxonMobil, News

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– asks Georgetown Chamber of Commerce

 

By: Kiana Wilburg

The Georgetown Chamber of Commerce and Industry (GCCI) is questioning whether Government’s contract with USA oil giant, ExxonMobil, includes provisions for the development of local products and services.
Specifically commenting on this matter recently was GCCI President, Deodat Indar.
The businessman said that it will take more than just a mere policy paper to get oil giants to support local development. In this regard, he cited the case of Nigeria.
The GCCI President recalled that the Government of Nigeria did not depend on a policy paper to ensure ExxonMobil gave monetary support for the development and support of its local products and services. In fact, the administration ensured that this was negotiated upfront and placed it into the contract that it signed with the oil king.
It was this foresight that led to the country drawing down on millions of dollars recently for development purposes. ExxonMobil provided $975 million to support indigenous operators.
The funds are expected to enable indigenous companies that face many challenges; including limited funding to finance different projects and programmes.
ExxonMobil is one of Nigeria’s highest producers of crude oil, accounting for almost 600,000 barrels per day of crude, condensate and natural gas liquids. The American company has been in that African country for over 40 years with a track record of operating a world class facility in the country. It also looks forward to boost crude oil production there.
Because of the contractual safety nets employed by Nigeria, ExxonMobil was even made to invest heavily on human development in Nigeria which was very significant in bringing about competition for national growth. The company was also made to invest massively in community development in areas of education and infrastructural development, while ensuring sustainability on the long-time benefit.
Over 700 graduates benefitted from the company’s skilled training, and majority of them have been employed by various oil and gas companies in Nigeria. (https://www.vanguardngr.com/2017/11/hope-rises-local-content-exxonmobil-ncdmb-provide-975m-n61-18bn/).
“I cannot say if our government has negotiated on Guyana’s behalf in this regard because we have not seen the contract we have been asking for, for some time. These things have to be negotiated upfront so that when you get into production, you have something you can go back to and say to the oil company, ‘you are supposed to help with a university wing that is supposed to help with this or that…”

The GCCI President added, “But if you don’t, you won’t get it when the oil companies get into production. We are at a loss right now. We don’t know if the government did this for the nation.”
Strategic Advisor and former Minister for Energy in Trinidad and Tobago, Kevin Ramnarine, recently advocated that having a local content policy would not be enough. He too, insisted that it must be backed by legislation if one intends to really compel companies to utilise local goods and services for the oil and gas sector.
He shared that Trinidad only woke up to Local Content around 2004, but this was pretty late for the Twin Island Republic. In spite of the late start, Ramnarine said that the country made the decision to fabricate offshore platforms which were previously manufactured by other nations.
“So from 2003 to 2017, we fabricated eight offshore platforms in Trinidad. These used to be fabricated in the United States of America or Mexico before we started it…There is a local content policy in Trinidad. But now, having the benefit of hindsight, it should be legislated.”
Ramnarine added, “The sooner you get there the better, or it will take a lot longer to get there. You have to have the power of law to compel the companies to use local goods and services.”
Minister of Natural Resources, Raphael Trotman has already indicated that it is very likely that come year end, Guyana will have in place, a robust Local Content Policy for the oil and gas sector.
Trotman reminded that the Government has retained the services of world-renowned expert, Mr. Anthony Paul. The Leader of the Alliance for Change (AFC) noted that Paul was keen on completing and having distributed for consultation, the first draft policy.
“The idea for this is that we could not move to legislation without first having a policy. Legislation should follow policy rather than the reverse, and so it was thought that we should craft the policy before 2020…”
Guyana’s draft Local Content Policy has been criticised in recent months for lacking provisions which would safeguard against exploitation by companies.
The draft speaks nothing of how to avoid procurement fraud, conflict of interest and favouritism, among other crucial areas.
Instead, the draft Local Content Policy framework seeks to address the suite of opportunities that may arise and the approaches to be taken in selecting and developing opportunities related to enhancing the capabilities of Guyanese nationals and businesses.
The Policy articulates that this will be done through training, development and employment initiatives (Capacity Development), ensuring availability of ownership participation for qualified Guyanese equity interest (Ownership Value), supplier development provisions for goods and services by locals to support sector operations (Local Content); and well-tailored social contributions for greater impact and benefits (Societal Benefits).
It also describes what will be done to ensure that the activities in the petroleum sector are conducted in a manner that transparently secures the maximum benefit for the people of Guyana, while recognising the limitations of the country and holding all actors accountable to the present and future generations of Guyanese who are the owners of the nation’s petroleum resources.
Additionally, the draft policy recognises that the petroleum resources of Guyana belong to all its citizens, and represent an asset of significant intrinsic value, which, once removed, diminishes the wealth of the nation, unless there is transformation in value from resources below the ground to improved quality of life above it for current and future generations of Guyanese.
The draft says, “Guyana will approach the development of its petroleum resources, people and businesses in a pragmatic, transparent and accountable manner. This will be conditioned by existing circumstances and an analytical approach to understanding the resource, the activities it engenders and our input capabilities. We shall pursue strategic opportunities for local capacity development and participation that give us the maximum possible benefit now and in the future.”
The Policy also states that Guyanese will participate in a manner that gives preferred access and opportunities to improve and enhance the country’s capabilities so that it can become internationally competitive and in the end, the country will progressively provide a greater amount of future services.
Capacity development, to enable more value retention, will be treated as an investment, rather than a cost, the policy outlines.

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