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Saturday, February 27, 2021

Guyana: Managing Local Content Expectations

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OilNow is an online-based Information and Resource Centre which serves to complement the work of all stakeholders in the oil and gas sector in Guyana.

The need for, and introduction of requirements for local content in Guyana’s emerging oil and gas industry, continues to engage the attention of stakeholders and the public at large. Even as a draft local content policy framework is being reviewed, Guyanese are eager to know that the business community and society will benefit from opportunities in the sector and that these opportunities will not be captured entirely by foreign companies.

Local content requirements aim to create jobs, promote enterprise development and accelerate the transfer of skills and technologies. Local content has therefore become a strategic issue for the oil and gas industry; presenting both challenges and opportunities.

Local content regimes pose both risks and opportunities for host countries and oil and gas companies. For example, operators and international contractors may face unrealistic expectations or targets from host governments or communities seeking quick results; opportunities come from longer-term efforts focused on helping to develop local businesses and employees. Stringent local content laws, in countries where the requisite skills and capacity are not immediately available, can adversely impact the industry.

A realistic local content strategy can contribute to the stability of the business environment; meeting expectations of host governments, driven in many instances by the expectations of local communities and business. Oil companies can maximize opportunities for achieving higher levels of reliability and quality through local supplier proximity; and maximize opportunities for lower costs on some locally-procured goods and services, in the long term.

According to an IPIECA study, an effective local content programme usually features training and skills development elements to help local populations achieve the minimum standards required by the company – either in terms of general education or specialist skills. Such training can be an in-house initiative, or the company can look to local institutions to provide any necessary training. In either case, the programme should be based on a detailed analysis of local capabilities and a schedule of the skills requirements over the life of the project.  IPIECA is a global oil and gas industry association for environmental and social issues and serves as the industry’s principal channel of communication with the United Nations.

In Guyana, the overarching questions must be; has there been a comprehensive study to determine the capabilities that exist locally and how these capabilities match up against the list of goods and services that will be needed for the Liza development and production project? How prepared is the Guyanese private sector to immediately provide specialized goods and services to operators in the industry? For those goods and services which it can supply, are Guyanese companies being given the opportunity to do so? And in the instances where goods and services must be procured from external sources, is there a clearly defined system that allows for involvement of the Guyanese private sector so that there can be a gradual transfer of knowledge and skills? This is particularly important for a country that is new to the oil and gas industry and is therefore at the beginner’s stage of the learning curve.

A thorough examination of the aforementioned should be done and the findings made public. Anything less allows for the development of distrust and misunderstanding among the stakeholders involved; the operators, the government, and the Guyanese business community and people.

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