Local content requirement plans stirring debate in Guyana

Guyana needs a phased-in approach with foreign partners to develop the country’s local content capacity for the oil and gas industry, and other sectors.

Guyanese policy and risk analyst Bobby Gossai made the comment on Tuesday during a talk organized by The Caribbean Council.

“The incremental volume of businesses that are coming in are allowing the local private sector to adapt to new ways of doing business, new technologies, new approach and of course new capital markets, because there will be the need for new investment,” said Gossai.

He added, however, that “we don’t want to have too much of an infant industry protection where companies in Guyana are protected through local content policies for 20 years and then after 20 years, they still can’t be able to produce for themselves.”

Last week, President Irfaan Ali appointed a local content panel to conduct a consultation and draft recommendations.

Gossai also stressed the need for greater transparency and effective governance of the Natural Resource Fund. He applauded the government’s decision that oil revenue will not be used for an emergency budget.

On Monday, during a press conference with President Ali, vice president Bharrat Jagdeo said the fund may be repealed or amended.

Read Guyana remains committed to accountability and transparency and How Guyana could improve oil windfall governance

Other required actions for the analyst are the drafting of a depletion policy to determine the rate of oil extraction, an industrialization policy in preparation of gas to shore development and the build-out of shore support and infrastructure, such as a deep water port.

In addition, Gossai recommended new regulatory and legislative frameworks to encompass the whole value chain, including midstream and downstream.

And although he supported the creation of a petroleum commission as the sector’s regulator, Gossai pitched the idea of establishing new institutions, such as a national oil company.

NEW DISCOVERY

“This will play an integral part in our long-term growth plans which will bring significant value to Guyana’s development,” natural resources minister Vickram Bharrat said following news of an 18th discovery on the Stabroek block.

Read ExxonMobil announces Redtail discovery offshore Guyana and Hess Announces Oil Discovery at Redtail, Offshore Guyana

“These significant discoveries in the new and emerging oil and gas sector will provide the impetus to the government’s effort to re-vitalize and re-capitalize the traditional productive sectors,” Bharrat added.

During the press conference, Jagdeo said that when ExxonMobil comes up for licensing for blocks Canje and Kaieteur, agreement terms would not be like those for Stabroek.

Jagdeo added that work is underway for a standard production sharing agreement for future operators.

The vice president highlighted that negotiations continue with ExxonMobil for development of Payara as part of Stabroek to iron out differences.

Meanwhile, in its latest fleet status report, Noble said that the Sam Croft rig (pictured) - currently with Apache in Suriname - secured a six-month contract with Esso for Guyana operations from January 2021 to July 2021.