Oil companies monitor every cent they spend; ensure you monitor your local content

Mar 26, 2018 ExxonMobil, News

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 – Int’l expert warns

By Kiana Wilburg

Oil investors have one simple goal; convert the oil wealth of a nation and take it to their shareholders as quickly as possible.
To get the most out of what they do in this regard, several strategies are employed. One of them includes a careful monitoring of every cent that is spent.
But if oil companies can do this, then why is there a fuss or a nonchalant attitude towards carefully monitoring the number of people employed and trained by these operators?
This very perspective and question was what renowned Local Content Expert, Anthony Paul put to his attentive audience at the recently concluded Spotlight on Energy Conference in Trinidad and Tobago.
There, Paul spoke of the importance of Local Content and the fact that value can
The international expert on Local Content said, “We have a tendency of focusing on getting value from the taxes and royalties that the oil company has to pay the government. But in addition to this, we can get people employed, ensure the provision of goods and services for the sector and that is where the local content aspect is in the value chain.”

The Advisor to Chatham House stated, “But what gets monitored gets done. You might think it’s a lot of work to monitor local content on a person by person basis or a contract by contract basis but companies monitor every cent they spend. And so, Local Content must be monitored.”
Paul stressed that oil companies track things in detail and keep records.
He also revealed that in Trinidad and Tobago, the Government has access to all records held by oil companies. He said that this is necessary so that the relevant authorities can find where slippages of revenues are taking place and close them off. Paul said that Trinidad and Tobago’s Local Content Committee has been providing technical input in this regard.
(To see the full video on Mr. Paul’s presentation, follow this link: https://www.youtube.com/watch?v=zLAln6QfX1I&t=8048s)
NEED FOR REGULATORY BODY
Regardless of how rigorous and ideal some laws or policies may be, if there is no person or body to ensure implementation, then it would all be for nothing. The same concept applies to Guyana’s Local Content Policy.
According to Paul, a regulatory body must be in place to ensure there is substantial use of local goods and services.
In a recent interview with Kaieteur News, the Chatham House Advisor said that Guyana’s draft Local Content Policy makes provision for this salient recommendation. Paul said that the Policy Framework identifies the need for monitoring, evaluation and reporting when it comes to implementation of Guyana’s Local Content Policy. Paul reiterated that a regulator will have to be responsible for this.
The Oil and Gas expert stated that there are different models which are in use with varying degrees of effectiveness.
The Chatham House Advisor said that in Ghana, by regulations, the Petroleum Commission is the responsible regulator. He said that the Petroleum Commission has instituted guidelines and procedures for reporting.
He noted that the regulations include targets which are to be achieved. He also revealed that the Commission has a dedicated local content team and work systems that cross different departments.
In the case of Nigeria, Paul noted that a specific agency, The Nigerian Content Development and Monitoring Board) NCDMB), was established by legislation for managing Nigerian Content. Paul said that the NCDMB has dedicated teams and has been very effective in transforming the local content landscape in Nigeria.
Closer to home, Paul said that the Ministry of Energy and Energy Industries (MEEI) in Trinidad and Tobago is responsible for all aspects of regulating the industry, other than fiscal and environmental.
Paul said that Trinidad and Tobago has some strong regulations requiring local capacity development and local content and for reporting and monitoring performance, but these have not always been robustly applied.
He said that the MEEI does not have dedicated Local Content Personnel, but it has established a multi-stakeholder Permanent Local Content Committee, to oversee implementation of its 2004 Local Content Policy which is aligned with the provisions of the Petroleum Regulations.
The Oil and Gas expert said, “There is an old saying, ‘what gets measured, gets done.’ So it makes sense that Guyanese are made aware of the progress of the policy by having a responsible agency report on measurable outcomes.”
The Advisor said that unless that agency is somehow empowered to effectively undertake its responsibilities and held accountable to stakeholders, there is no guarantee that monitoring and reporting will be adequately conducted or that the potential benefits will be achieved.

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