ExxonMobil wants flexible Local Content Policy/Laws

Apr 02, 2021 News

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…says unrealistic demands can jeopardise operations—Local Content Consultant

Kaieteur News – ExxonMobil Guyana is warning the Guyanese public to temper expectations with regards potential benefits to be had from tapping into the oil and gas industry, since these could have negative implications.
This position was reaffirmed following the company’s latest submission to the government on the draft local content policy, “reaffirming its commitment to implementing effective initiatives to help build a globally competitive workforce and supply base.”
The company in a public missive on Wednesday confirmed that it had submitted written submission to the government following engagement with officials from the Ministry of Natural Resources recently.
This is in addition to the quarterly reports that are compiled and submitted to the Ministry.ExxonMobil Guyana President, Alistair Routledge, in making the announcement, underscored the company’s commitment “to growing local content that will generate broad and sustainable economic development, while supporting safe development of the nation’s oil and gas resources.”
He said, ExxonMobil is “pleased that the government continues to seek broad input and collaboration to develop an approach suited to Guyana’s unique situation and national development objectives.”
He cautioned nonetheless that “Local content policy or legislation should be informed and supported by appropriate economic, labour and industrial baseline studies.”
According to Routledge, “It is essential that when driving local content in one sector, actual and projected national capacity is taken into consideration to avoid negatively impacting other sectors of the economy.”
He said “prior experience around the globe demonstrates that overly aggressive local content regulations and mandates can have unintended, negative consequences on the development of projects, industry, and the broader economy.”
The company, earlier in the day, hosted a Local Content Backgrounder for journalists, where Socio-Economic Local Content Consultant, Traecy Roberts, spoke to the need for flexibility in any Local Content Policy and Laws that are promulgated.

She was adamant that changing the laws and contract terms intermittently could undermine investments and the operations of the industry generally.
Roberts further contended that with the oil and gas industry being a technical operation, the company would not want to jeopardise its operations by setting unrealistic standards.
She cited as example, the fact that Guyana does not even produce steel.
According to ExxonMobil Guyana Local Content Advisor, Devon Seeram, the company works closely with its prime contractors to ensure that they are equally committed to developing local content and tracks that their local content plans are effectively implemented.
He too pointed to the need for better understanding of the needs of the industry and noted, for example, that while in 2020 some US$3M was spent by the company for transportation, only about US$1.8M was actually retained in country, since the remainder went towards imports which means that the money expended was not actually expended in country.
He used accommodations as another example and noted that last year while some US$17.6M was spend on accommodations, 80 percent of this spending was not actually retained in country, since that went into importing commodities and materials.
This scenario was repeated, across other sectors more glaringly in the form of insurance, where only one percent of what was spent was spent in country since local insurers did not have the capacity.
He did seek to point out that since “our first discovery in 2015, we have made significant progress creating jobs, growing the number of local suppliers we work with and increasing our local spending.”
He disclosed that at the end of 2020, the total Guyanese workforce supporting ExxonMobil Guyana’s overall activities was 2,338 persons and accounted for some 56 percent of the local workforce.
According to Seeram, since 2015, more than GY$77.6B or some US$338M has been spent directly with more than 800 Guyanese companies for goods and services ranging from food to engineering.
Roberts did use the occasion to also caution that because ExxonMobil is the operator in three different blocks that are in different stages of operations, the workforce demands can vary and cited as example periods where more technical expertise not available in country would have to be utilized.
The company officials also noted that in its development of its local content policy it was cognizant of the fact that experts could be pulled away from other critical sectors in the country.
The consultants used the occasion also to speak of the need for domestic companies to reinvest into their operations in order to build capacity.
According to Seeram, the company collaborates with its suppliers to ensure Guyanese are given preferential treatment “once they have the capacity and are competitive.”

 

 

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