A lot more needs to be done with Local Content in Guyana

Apr 04, 2021 News

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…is critical to future economic development of country—Fmr. T&T Energy Minister

Kaieteur News – While Guyana has not done too badly in terms of its development of its hydrocarbon industry and related benefits in recent years, Former Minister of Energy for Trinidad and Tobago (T&T) Kevin Ramnarine, believes “when you look at local content, for example, there is a lot of work to do with local content, and a lot more involvement of the Guyanese private sector that could happen.”

He did concede however, that “by and large, when you look at what has happened, when you look at the amount of Guyanese who have been trained and are working on the FPSOs (Floating, Production Storage and Offloading Vessel) and the drill ships at the shore-base and so on and you look at what is coming potentially.”

Ramnarine was speaking during a recent webinar hosted by OilNOW where the former T&T Energy Minister gave his views on the proposed gas to shore project for Guyana.
According to Ramnarine there will be in future, more shore-bases being constructed to service the industry which would see an increased demand for local human resource.
Ramnarine’s position was had a day before the Ministry of Natural Resources announced that it had concluded a third draft Local Content Policy for the country.
The Ministry made the announcement on Tuesday last—some two years since the country started producing oil—and reported that “…the general focus of the stakeholders’ response to the draft document fixated primarily on the state of the current capacity of Guyanese’s businesses and skills.”
This in addition to the “expectations for better participation and benefits from the sector, the identification of opportunities that exist for Guyanese to participate in the industry and the need for transformation in key related sectors such as education and finance to support business enhancement that will cater for the needs of the growing petroleum economy.”
Speaking to the general sustainability of the industry and its long term employment benefits for Guyanese, Ramnarine in his discussion had noted that the cost of producing a barrel of oil in Guyana’s deep waters is very competitive.
He posited “when you stack it up against the break even cost in let’s say, shallow water Trinidad, the break even costs of producing oil in Guyana will keep the industry alive in difficult times.”
Ramnarine suggested that this would allow for when oil prices go into the US$20s and the US$30s per barrel “as happened last year, it is not something which would cause you to get, you know a heart attack in Guyana.”
He opined that the industry survived last year and it is because of the cost of producing a barrel of oil compared to other deep water provinces around the world right.
As such, Ramnarine noted that “Guyana in terms of oil and gas, I think the country hasn’t done badly, (but) of course there is a need to institutionalize the industry in Guyana through the establishment of the Petroleum commission and the passage of the legislation to support that.”
He was adamant “there is a continuous need to continue to educate the population and create the skills resource base and noted that “even so, a lot of Guyanese have transitioned from manufacturing and from gold mining, and from the bauxite industry and so on, into the oil industry and the transition has happened pretty quickly.”
According to Ramnarine, “I think the government is on the right track with putting their foot down for local content, I think they are taking local content very seriously and reiterated “local content are important for the sustainable economic development of the country.”
The Ministry said the latest version of Guyana’s Local Content Policy came about through consultations held with some 180 public and private sector agencies and firm.
The latest round of consultations in an attempt to finalize a local content policy for Guyana began on March 3, last and concluded on March 25, some 23 days later.
Guyana’s first attempt at promulgating a Local Content Policy that would eventually direct a legislative framework for enforcement began soon after the 2015 Liza I discovery by a US oil major—ExxonMobil—led consortium in the Stabroek Block some 126 miles offshore Guyana in its Exclusive Economic Zone.
The initiative has seen several rounds of consultations by both administrations including consultations such as renowned petroleum specialist Anthony Paul.
The Trinidadian had submitted a report that was supported by the local private sector over its proposals but was subsequently scrapped by the then coalition A Partnership for National Unity, Alliance for Change (APNU+AFC).
That administration engaged yet another consultant, United Kingdom (UK) resident, Dr. Michael Warner, who led another round of consultations, this time submitting a report to the then Department of Energy, since subsumed into the Ministry as its Petroleum Management Unit.
That report was embroiled in controversy not only over its author and his relations to the operator ExxonMobil but the fact that the final document appeared to have removed safeguards for locals and was instead heavily in favour of the oil operators.
That second document was never finalised as a Policy which led to the Irfaan Ali led administration initiating a third round of consultations that have since been completed with the date for a final document to be announced.

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