Guyana’s local content policy, which is currently being revised, will require oil industry operators to adopt Sustainable Supply Chain Management (SSCM) practices, and a planned Local Content Secretariat will coordinate all related activities at a national level.
Giving the background for this development, Guyana’s Minister of Natural Resources Vickram Bharrat said on February 1, “Our government’s focus is to ensure that all aspects of business in the oil and gas industry are developed with equitable local and foreign business participation…sustainability in the context of oil and gas development, therefore, must be seen as a development that is able to balance developmental progress with environmental and societal growth.”
At the time, Mr. Bharrat was addressing a wide cross-section of stakeholders at the Guyana Supplier Forum 2021, a virtual platform organized by the Centre for Local Business Development with sponsorship from ExxonMobil Guyana and Stabroek block co-venturers Hess and CNOOC. The forum gives Guyanese suppliers up-to-date information on the procurement process, key contacts, and upcoming tenders
The minister explained that the SSCM model embraced by the government envisages that individual companies and their supply chains can achieve their economic, environmental, and social goals through managerial decisions and actions that “facilitate strategic and transparent integration of key business processes and cooperation among participants in supply-chains.”
He asserted that companies operating in Guyana must move beyond their immediate economic concerns and proactively address environmental and social matters related to supply-chain activities. “Companies must employ new strategies to achieve their sustainability goals, such as through carbon footprint reduction, pro-growth local purchasing and net zero carbon product design,” he said.
He declared that the SSCM policy will allow for improved economic growth and social activities because it necessitates better standards and procedures that provide for the sustainability of the industry’s supply chains. “Hence, SSCM practices in the industry must include firm internal factors that affect the sustainability strategies employed by different functional areas of its supply chain,” he added.
Mr. Bharrat emphasized that Guyana needs to activate a proper business policy to address any supply chain gaps and identify internal factors that will impact the SSCM strategies. In this regard, he said the nation’s local content policy is being revised to reflect preparedness for sustainable practices of companies that operate in upstream and downstream oil and gas supply chains.
He said one of the government’s main expectations of the supplier forum was to get information to facilitate a comprehensive assessment of the factors that are likely to impact the sustainability strategies with regard to four key supply chain functions: supplier management; production management; product stewardship; and logistics management.
According to the minister, the upcoming revised local content policy, which will be geared to produce effective SSCM practices in Guyana’s oil and gas industry, would help to eliminate or reduce the negative impacts of the activities of oil and gas production while allowing the sector to sustain itself economically to maintain the security of energy supply of the nation.
The SSCM model requires companies to educate and train suppliers through systematic management techniques that enable identification and management of the environmental and social risks involved in their operations. They also have to incorporate systems, policies, strategies and actions supported by strong leadership commitment and employee involvement in a timely and effective manner.
“Management initiatives will be seen as the main driver for low-carbon production practices…followed by government regulations and international orientation,” the minister said. He noted that companies must also use innovative strategies based on in-house knowledge to develop local processes and technologies through the transfer of skills via international companies and experts.
To this end, the Local Content Secretariat will coordinate all activities related to SSCM at a national level, he said, and its work will be based on the revised policy’s use of local content targets to comply with legal requirements, plus the incorporation of environmental, social and corporate governance, community participation and capacity building.
The minister said government expects the new Secretariat and the well-established Centre to work in tandem to facilitate the participation of local firms in the oil and gas projects and operations, and this will also provide an entry point and knowledge exchange hub for local firms, government officials and foreign companies, thereby enhancing the nation’s cultural capital and the social capital of local firms.
“The SSCM is the transparent, strategic and systematic integration of key business processes that enable supply chains to achieve a joint optimization of economic, environmental and social performance,” Mr. Bharrat said.
