Breakneck speed of oil and gas sector preventing Guyanese from enjoying real benefits of Local Content- Chris Ram

Oct 02, 2024 News

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…says revision of areas carved out for citizens long overdue

Kaieteur News- Guyana has been on a race against time to fast track the development of oil and gas as the global push for a transition to cleaner energy by 2030 continues to gain momentum.

After accepting a bad oil deal in 2016, which politicians often describe as the world’s worst oil contract, the government not only refuses to seek better terms but have implemented a new Law to claw back resources for citizens. In 2021, the government passed a Local Content Law to ensure oil companies and their contractors utilize services offered by Guyanese and even employ more locals to satisfy the labour demands.

However, with the petroleum sector developing at a massive pace, Guyanese are unable to enjoy the real benefits of local content. Attorney-at-Law and Chartered Accountant, Christopher Ram in recent comments during an episode of ‘Oil Talk’ on Kaieteur Radio (99.1/ 99.5 FM) made this point.

The Lawyer told listeners and viewers of the broadcast, “Part of our problem is that we have tried to move too fast. We have moved from zero to 100 in a couple years. We don’t have the capacity so we can’t have real local content.”

Ram pointed out that the Local Content Act sets out 40 areas for Guyanese to benefit from. He said this was a mere fraction given that there are about 300 to 500 types of expenditure incurred by the oil companies and sub-contractors. He said, “Only for 40 (areas) and some of them they range from 100% like for cleaners which is no big deal, Guyanese are good cleaners apparently but we can’t do the higher things.”

With Guyanese being paid to do minor jobs, receiving meager salaries, the Lawyer noted that the respective percentages for the 40 areas should have been changed within a year. On the other hand, he said, “The schedule to the Local Content Act has remained unchanged. We have not taken account of experience and how it has worked compared with what we thought it should be.”

Ram was keen to note that while the Vice President, Bharrat Jagdeo is on record indicating that government has sought to “rebalance” the lopsided contract through the implementation of the Local Content Act, this was simply impossible. He argued, “Of course not and you don’t rebalance a lopsided contract by finding some extraneous means. You rebalance it by renegotiating the offensive portions of the contract and that is what our government and our political opposition have refused to do. They don’t want to hear the word renegotiation. The contract provides you can modify and amend.”

Guyana presently has three Floating Production Storage and Offloading (FPSO) vessels in operation, producing close to 700,000 barrels per day.

The first project, Liza One came online in December 2019, followed by Liza Two in February 2022. The third project, Payara, swiftly followed suit, with first oil recorded in November 2023.

Exxon has received awards for its rapid development of oil projects in Guyana. In April 2023, during the Offshore Technology Conference (OTC), the company was recognized for their innovative work that has resulted in Liza Phase 1 being one of the fastest projects of its type in the industry, cycling from discovery to production in less than five years, compared to the historical 10-year timeline for projects of this magnitude.

It was added that Liza Phase 2 then came online about two years after Liza Phase 1 and within eight years of discovery— helping to responsibly meet the world’s energy needs at a critical time.

Back in February 2023, President of ExxonMobil’s Upstream Company, Liam Mallon had boasted about the breakneck speed with which ExxonMobil Guyana was able to cut the time in half to move from exploration to production in a deepwater project.

He underscored that since the first discovery in 2015, the estimate of Guyana’s resource has grown to nearly 11 billion barrels, which makes it the largest in industry in the past decade.  “In total we’ve made more than 30 discoveries, and we’re still exploring Guyana’s vast potential,” Mallon added.

Mallon continued, “And really critically, we moved from the very first Liza 1 exploration well to first production nearly three years ago in under five years. That is roughly half the industry average time for a typical deep water development.”

Notably, Mallon stated too that in total, the oil major anticipates having six projects online with a capacity of more than 1.2 million barrels per day by the end of 2027.

 

 

 

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• benefits, Local Content, oil, Ram, speed

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