Guyana remains cautious against falling oil prices, expectations

0

As excitement among Guyanese continue to rise about the prospect of the country becoming a major oil producer, the government is encouraging an atmosphere of cautious optimism in face of falling oil prices and global oversupply of the commodities and services sectors.

In addition to revenue accruing to the State via taxes and royalties, Guyanese are aware of the potential to capture and retain value within the country through the conduct of activities and the offer of services along the value chain. Most of these services are currently imported into Guyana.

The Guyana government has acknowledged that provision of these activities require skills, technology, equipment and infrastructure, most of which are not currently present in the country.

“We Guyanese are confident that, with a guided strategy, some of our existing skills, services and facilities can be used, improved and enhanced, while others can be introduced, supported and grown…,” government has pointed out in its draft Local Content, Capacity Development and Value Addition Policy Framework.

Aware of changing conditions globally in the oil and gas industry, the country’s government is issuing a word of caution about expectations among Guyanese as the full potential of the estimated 2 billion barrels of recoverable oil discovered so far offshore, sinks in. “Although it [oil discovery] is world scale and of very significant size, its development will take place during a period of low oil prices and global oversupply of both the commodities and the services sector,” the draft local content framework states.

Many of the goods and services used by the sector are highly specialised, requiring very high levels of technology and innovation and investment capital and experienced specialists. The level of expertise among Guyanese in an industry that is totally new to the country will also impact the extent to which they, at least in the initial stages, benefit directly from opportunities in the sector.

“No country in the world manages to get to 100% local content. Most experts acknowledge that accessing a wide pool of talent, bringing experience from different locations and situations brings efficiency of operations and can fast track the learning experience of collaborators,” the draft document points out.

Guyana’s petroleum discovery and the draft policy framework come at a time when several developing countries have been privileged to make similar, potentially transformative discoveries. Many have implemented local content policies and legislation, with varying degrees of success. At the same time, more mature oil and gas provinces have seen major discoveries and have also used their experiences to implement local content policies and strategies.

“Guyana is fortunate to be able to benefit from the experiences of these and to consider them in designing a policy that is fit for purpose and allows for fair and relatively simple implementation and oversight, while remaining flexible to respond to changing circumstances,” the document outlines.

While recognizing these realities, the Guyana government has made it clear that its primary focus is to ensure that Guyanese realize the full benefits derived from opportunities in the sector. The country’s Minister of Natural Resources, speaking on the draft local content framework, says, “This policy therefore, shall have as its primary aim and objective, the ensuring of the education, inclusion and advancement of as many as possible in the value chain of the oil and gas industry.”