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‘No need to increase local content targets’ – Routledge
(Kaieteur News) – The private sector in Guyana has been pushing for government to increase the local content targets set out in law to ensure Guyanese enjoy more opportunities in the oil and gas industry, but ExxonMobil believes this is unnecessary.
President of ExxonMobil Guyana Limited (EMGL), Alistair Routledge recently shared this view with reporters when asked to comment on discussions around expanding the local content schedule. According to him, “fixed targets” can be motivational but can also lead to overinvestment where there is only a limited demand.
President, ExxonMobil Guyana, Alistair Routledge
“As it is always, the question is, is it a good thing or not to have, you know, those fixed targets. They can be both motivational, but they can also tend to lead to over investment because people rush in saying, well, I’m guaranteed to get work if I invest in that kind of skill or whether product or service offering,” he said.
Routledge added, “But of course, there is only a certain amount of demand. So, I think what has been happening pragmatically over the last several years is that because as an industry, we’ve committed to working so proactively with the government on building up the capacity in the industry, matching the demand with the supply, encouraging other foreign direct investments through these smart partnerships, for now, at least we haven’t seen a need from the government to push additional targets.”
Exxon believes that there is already great collaboration across the industry between government and the private sector with various training institutions now upskilling Guyanese. To this end, Routledge noted, “So as long as we are all working together, I believe that is the most constructive way, and probably the fastest way to efficiently build local capacity, so that the local supply chain can benefit from the opportunities in the center.”
While ExxonMobil has dismissed the need for Guyanese to have greater participation in the sector, citing “demand” concerns, the company is on course to almost double its current rate of production over the next few years.
Presently, four projects are in operation and are set to produce 900,000 barrels of oil daily. In the meantime, three other projects are in the development phase, with an eight-development pending government approval. By 2027, Exxon is aiming to increase Guyana’s daily production rate to 1.7 million barrels per day by 2030.
The Local Content Act was passed in the National Assembly in December, 2021. It is intended to regulate the way companies operate in Guyana’s oil and gas sector; employ persons, buy services and the way that they procure goods.
The First Schedule of the Act sets out 40 categories of work for Guyanese participation via the supply of goods and the provision of services which include: food supply, rental of office space, accommodation, insurance, accounting and legal services.
According to the Act, Guyanese must provide 90% of office space rental; 90% of accommodation services (rental of houses and apartments;25% pipe welding onshore; 75% non-hazardous waste management; 90% janitorial and laundry services; 90% catering; 75% food supply; 100% immigration services and 100% local insurance services to name a few.
The Department of Public Information (DPI) reported in January of this year that the Private Sector Commission (PSC) submitted proposed amendments to the legislation to President Irfaan Ali for a thorough review.
The private sector here has called for increased local content targets in the schedule to shore up more opportunities for Guyanese.
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