Local Content Secretariat must explain why Exxon’s figures not matching with theirs

Local Content Secretariat must explain why Exxon’s figures not matching with theirs – VP Jagdeo

May 26, 2023 News

Kaieteur News – Vice President, Dr. Bharrat Jagdeo agrees that there is a huge discrepancy between the local content expenditure figures disclosed by the Local Content Secretariat (LCS) and ExxonMobil Guyana.

Earlier this year, it was reported by LCS officials that over US$700M was trapped in country for local content for the year 2022. But ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) recently reported that its local content spend, including that of its contractors, was in the range of US$400M.

At a press conference yesterday, Jagdeo said, “There is indeed a big gap on the local content spend…The secretariat needs to say how it came up with that (figure). That is a real concern.”

This US$300M difference in estimates is indeed staggering. One can argue that oil sector spending is not limited to ExxonMobil and the Stabroek Block. However, operations related to other blocks were minimal compared to that of Exxon’s operations, and certainly did not account for more than 40% of local content spending in 2022.

While Exxon drilled 10 exploration wells in the Stabroek block in 2022, the only outside exploration well drilled was the Beebei well in the Kanuku block by Repsol. CGX Energy had intended to drill Wei in 2022, but had to postpone exploration drilling because the rig was in use in Trinidad beyond the contract period. ExxonMobil has also been undertaking development drilling to support multiple projects.

The Local Content Secretariat would do well to account for this massive US$300M difference, lest it opens itself to accusations of bloated or overoptimistic achievements.

Meanwhile, Attorney General and Minister of Legal Affairs, Anil Nandlall said the government has commenced a review of the Local Content Act 2021. Announcing this recently, Nandlall said “We continue to receive complaints in relation to the local content framework and the local content legislation. Reports indicate that Guyanese citizens are being denied fair opportunities to participate in the oil and gas sector and related industries.”

The government is also looking to add more services to the Act, which currently mandates that goods and services are procured from Guyanese nationals and companies in 40 areas.

According to the law, the Local Content Secretariat is mandated to ensure that the provisions of the Act are implemented. It functions as the focal point for the monitoring, evaluation, coordination, and reporting of local content in the petroleum operations of Guyana.

In so far as the Act mandates every Contractor, Sub-Contractor, or Licensee to implement local content as an essential component of their petroleum operations, the Secretariat, through the issuance of industry guidelines, aims to provide detailed and specific guidance to Contractors, Sub-Contractors, or Licensees with regards to their reporting obligations.

The law allows officials attached to that body to have unrestricted access to a contractor, sub-contractor or licensee’s facilities, records, reports, documents, data, and information. Such access is allowed for the purposes of monitoring, assessing, evaluating, investigating, auditing, and verifying compliance with the Act.

The law also empowers the Secretariat to develop and maintain measures for the effective implementation of local content by Contractors, Sub-Contractors and licensees.

The Secretariat can also develop and implement strategies that give preference to, or ensure equal treatment of Guyanese nationals and Guyanese companies as well as conduct market analysis and make recommendations to the Minister.

The Secretariat has several other functions which include conducting market analysis, making recommendations to the Minister, developing formats for local content plans and reporting, and developing guidelines for local content reporting, procurement and bid evaluation.

The Act obligates Contractors, Sub-Contractors, or Licensees to submit a local content report to the Secretariat, within 30 days after the end of each half calendar year, which is referred to as the Local Content Half-Yearly Report.