PPP to demand more from ExxonMobil on local content

Aug 16, 2020 News

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– consultations on loopholes, robust legislation underway

By Kiana Wilburg

When it comes to local content which involves the hiring and training of Guyanese as well as the procurement of local goods and services, the People’s Progressive Party/Civic (PPP/C) administration categorically stated that it has every intention of ensuring ExxonMobil is doing more than just the bare minimum.
Specifically outlining the government’s objective in this regard recently was Vice President, Dr. Bharrat Jagdeo.
During a press conference that was held on Friday at the Arthur Chung Convention Centre, Dr. Jagdeo said that the PPP/C will be demanding more from ExxonMobil.
His government was sworn in earlier this month after a five-month election standoff with the incumbent Coalition under David Granger.
The Vice President said the government made it clear to the American oil giant that it cannot claim, for example, the local content efforts of its sub-contractors are part of its efforts too.
Earlier this week, ExxonMobil told the media that it spent over $14B for the first half of 2020 on hiring, training and procurement here. But that money also included costs incurred by its sub-contractors.
More importantly, not a shred of evidence was provided to validate that said expenditure. At the end of the day, Guyana will have to foot that bill.
The Vice President also expressed his dissatisfaction with reports that Guyanese are not being paid fair wages by ExxonMobil’s sub-contractors.
When the salaries are compared with those given to foreigners, Jagdeo said it is just downright discriminatory. This state of affairs is just one of many that the Vice President said the government intends to change. He insists that the PPP/C wants Guyanese to get “comparable wage for comparable skill.”

POLICY & LEGISLATION

Jagdeo was keen to note that the PPP/C has every intention of bringing on board, robust local content legislation and policy. During the press conference, the Vice President alluded to his disappointment that the Department of Energy which was set up by the Granger regime, made no headway on this front.
The Vice President also reminded that the PPP/C, during its time in opposition, would have paid attention to the ideas that were suggested by some of the best minds in the industry on how Guyana could claw back value in the area of local content.
He said that the PPP/C is aware that those suggestions were not taken on board. Dr. Jagdeo said that the PPP/C has since engaged Trinidadian local content expert, Anthony Paul, on some of his ideas while reminding that he was the one who had prepared the first two drafts on Guyana’s local content policy.
He is also aware of the fact that Paul was contracted by the United Nations Development Programme to prepare a rapid assessment report on Guyana’s weaknesses and what needs to be done immediately to prepare the country for oil and gas.
While these documents have not been perused by the PPP as yet, Jagdeo assured that it would be done as the government wants the best minds helping Guyana.
“…We want to get the best technical inputs before we come up with a negotiation brief that will be cleared at the policy level, and then we want to engage directly with Exxon to see that this happens.”
Jagdeo also noted that President Irfaan Ali is expected to lead consultations with the entire Guyanese community on local content. “We will deal with it directly at that level so that people will be free to express their views. We have heard from the Guyanese public. We have seen how labour is treated and we have seen how the business or opportunities that could have come to Guyanese are farmed out to people… Exxon would have to look at this.”

PITTANCE

Over the past five years, Kaieteur News would have exposed how Guyana settled for poor local content terms from ExxonMobil, Tullow and Repsol.
Tullow which is the operator for the Orinduik Block offshore Guyana, is bound by its contract to pay during each year of the term of the Petroleum Prospecting License it has, or any renewal thereafter, US$25,000 for training.
This money goes into an account, which is managed by the Guyana Geology and Mines Commission (GGMC).
In Uganda however, Tullow is required to deposit with the government, or its nominee for the exploration period, US$100,000 per six months; US$150,000 per 12 months for the development phase, and following the commencement of production, a deposit of US$300,000 per 12 months. In the case of Ghana, Tullow hands over US$300,000 annually. Both countries also benefitted from funding for the technological and infrastructural support.
With respect to Repsol, which is operating Guyana’s Kanuku Block, GGMC collects US$30,000. Meanwhile, this Spanish multi-national gives Liberia a “minimum” of US$250,000 annually and US$300,000 per year to Iraq. They too, benefitted from an allowance for technological and infrastructural support.
In the case of Anadarko, which holds the licence for the Roraima Block offshore Guyana, the government settled for US$40,000 while this company contributes US$1M annually to Liberia and Mozambique.
As for ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), and its two partners, Hess and CNOOC/NEXEN, the government comfortably accepts US$300,000. But in the case of Liberia, Exxon is required to hand over US$750,000 plus a US$500,000 IT support fee.
It also gives US$500,000 annually for training of locals in Chad, along with the same IT support contribution that is granted to Liberia.
None of the Production Sharing Agreements (PSA) Guyana has with offshore or onshore operators, provide funding for technological and infrastructural support.

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