By Kevin Ramnarine – OilNOW
Guyana’s decision to legislate for local content in its oil and gas industry has been the source of debate in Guyana and in T&T. At the heart of the issue is the value captured or value retained by the host country from the activities related to the oil industry. Value is traditionally captured by the collection of royalties and taxes. However, that is not “the be all and end all” of value capture. Value capture can go well beyond rent collection.
The undertaking of high value activities in the host country by companies owned and controlled by nationals is another way to capture value. In this regard the Guyanese Government has taken a firm stance that it will not be relegated to the status of rent collector. The insistence that foreign multinationals engage local firms in high value activities is beginning to bear fruit and there will be more success ahead. One visible sign of success is the provision of shorebase services by Guyanese companies.
Flip over to T&T and there is another local content story emerging. In the early 2000’s Prime Minister Manning made progress with establishing a local fabrication industry at La Brea. I was Minister of Energy in T&T when BP decided to build the Juniper platform in La Brea. These projects provide spin off work for many other companies and directly and indirectly employ hundreds. Today, Trinidad and Tobago can be proud of Tofco’s achievements in platform fabrication. There have been other successes as T&T firms like Tucker Energy can hold their own with the best in the world. However, in recent times the momentum on local content has slipped in T&T. Far too often we hear stories of work that could be done by local companies that has gone to foreign service providers. When that happens there is value leakage. Dividends don’t stay in T&T for reinvestment.
As far as local content goes in T&T there has been a deafening silence in recent times. It is no longer afforded primacy in conferences and seminars. The absence of interest sends the signal that it is ok to ignore the skill base and resources that reside in T&T. The consequences of such indifference are devastating. One consequence is the loss of human capital. Many energy sector professionals and their families have migrated in recent years due to a lack of opportunity in T&T.
This is unfortunate for a country with over 110 years in the oil and gas business where billions have been invested to educate young people. T&T and emerging Suriname can take a page out of the Guyanese local content book where the will of the Government to ensure maximum participation by its citizens is leading to a rapid participation of local companies and job creation. Are there lessons to be learned from this approach?
About the Author
He served as Minister of Energy and Energy Affairs of Trinidad and Tobago from June 2011 to September 2015. From May 2010 to June 2011, he served as Parliamentary Secretary in the Ministry of Energy and Energy Affairs of Trinidad and Tobago. He is currently an Energy Consultant.