Author of Guyana’s draft local content policy framework, Anthony Paul, is warning that expectations of large-scale job creation in the South American country’s emerging oil and gas sector could lead to serious challenges down the road.
Mr. Paul, a UNDP expert on energy and strategy in the oil and gas sector, has worked on projects in the industry in several frontier countries around the world and has seen first-hand what unrealistic expectations among the population can lead to.
“I’ve seen great concern caused by expectations set too high…that created riots in Kenya, Tanzania…and I saw a lot of disruption in Ghana when people put high expectations around what is possible,” he said.
The greatest value from the oil and gas sector, he said, is not from direct employment but the provision of goods and services. He provided examples of a number of countries that have had to craft local content policy and legislation ranging from those with stringent requirements, like what Brazil started out with, to those with a more relaxed regime, such as Uganda.
“The countries who are new now – the frontier countries – are putting good regulatory procedures in place. Not always putting laws…but the key piece is the operating procedures,” he said.
Citing Ghana, whose requirements are similar to Guyana, he said, “Companies are required to submit development plans, production plans; each of those must have procurement plan, a skills development plan, a local content plan as sub-sets, even going so far as training and research plans.”
The consultant said it is important to have those commitments made which then allows for effective planning on what must be done and the approached that needs to be taken. “Local content, like anything else, does not work unless there can be benefits that result in more jobs created, more companies contracted, more monies taken in Guyana’s economy,” he stated.
The question of which approach is best for local content to be effective is being discussed in Guyana with sections of the business community calling for legislation that would make it mandatory for companies operating in the industry to use local content. The country’s Minister of Natural Resources, Raphael Trotman, has said that a local content policy should first be implemented which could guide the framework for any possible future legislation.