Oil Company ready to talk natural gas… but local leaders without an inclusive plan — PSC

Dec 10, 2019 News

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By Gary Eleazar

The major US Oil company is gearing for first oil in a matter of days—ExxonMobil Guyana—is ready to discuss the natural gas aspect of its production with Guyanese leaders. However, the local leaders are without a plan.
This is according to Chairman of the Private Sector Commission, Captain Gerry Gouveia, who was yesterday asked to weigh in on Article 15 of the Production Sharing Agreement (PSA) which stipulates that the Petroleum Minister along with the oil company would come up with an annual local content plan.
Gouveia used the occasion to lament the fact that Guyana’s leadership has in fact failed to have a national bi-partisan discussion on its oil and gas industry generally.
He said the fact is that the country is still to decide on the key by-product of the oil field production natural gas.
According to Gouveia, the company is ready to begin discussions with government.
He said while there was a decision taken that natural gas will not be flared, the country is yet to decide on what to do, or even where to land perhaps a pipeline to shore.
According to Gouveia, it is poignant to note that with first oil in a matter of days, Guyana is still to discuss in a bi-partisan manner, how the country can benefit from its natural gas resources.
Asked to speak broadly to the local content provisions in the PSA, Gouveia said that he did not believe any such plan should be formulated between the Oil operator and Government.
Under Article 15 of the PSA, within 60 days prior to the beginning of each year, the two would come up with a plan detailing the use of Guyanese resource and labour—a plan that is supposed to be updated annually.
Gouveia lamented the lack of a clear strategy. There is need for a national inclusive conversation aimed at charting a course forward with regards an oil and gas economy, he added.
It was explained that there exists a lack of a coherent strategy even among private sector bodies.
The PSC Chairman’s position comes on the heels of an announced initiative aimed at bringing about local content laws and not just a policy.
The decision by the PSC was taken in light of widespread concerns expressed by sections of the local private sector on the issue of local content. It took into consideration recent calls for legislative protection made by the Georgetown Chambers of Commerce and Industry (GCCI) and Guyana Manufacturers Association (GMSA).
The private sector umbrella organisation as such, announced that the PSC, which represents 23 private sector organisations, convened its Trade and Investment Sub-Committee to discuss the concerns and to give effect to the call for local content legislation.
Following its deliberations, a Multi-Stakeholder Working Group will be established by the private sector. It will include other stakeholders including civil society, labour unions, and political parties to broaden the discussion on local content legislation.
GCCI at a Gala Award ceremony, recently, also called for local content provisions to be codified in order to protect domestic businesses in the oil and gas industry.
GCCI President, Nicholas Deygoo-Boyer, in his address to the business leaders gathered for the gala affair, said that while the organisation welcomes “companies who invest into our country, GCCI believes that investment incentives should be expanded and codified as well as be accessible to both foreign and local companies in the various sectors.”
Addressing the growing debate over the issue of incentives, the GCCI President said that based on “much of what we have heard complaints about can be traced back to a need to codify the incentives so that they are transparent and available to all investors, both local and foreign.”
According to Deygoo-Boyer, “We have seen some significant investments recently by local companies. That should be commended, despite their challenges in accessing investment incentives commensurate to the level of investment.”
The GMSA recently backed calls by other private sector bodies for the establishment of laws regulating local content in the emerging oil and gas sector.
That body in a public statement said, “We are strongly of the view that a critical evaluation should be undertaken of all foreign based companies that have been provided with concessions by GO-INVEST and the Government.”
As such, the GMSA “urges the Government of Guyana to do so in order to ascertain whether there exists any Guyanese Company that have been and/or will be disadvantaged as it relates to unfair competition particularly within our Manufacturing and Services Sectors and beyond.”
GMSA said it would like that emphasis placed on Guyana deriving maximum benefits from its natural resources.
“To date, we have observed that there is no dedicated monitoring and evaluation mechanisms and/or institutions empowered with regulatory authority and autonomy to ensure the implementation of local content policy in Guyana.
As such, GMSA advocated that an independent Commission be established to remedy this anomaly and that in this context GMSA supports the formation of a “Local Content Commission to ensure that the intended goals are achieved and for necessary policy adjustments to be made if and when these become necessary.”

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