While the government has already indicated that it expects to see more local content inputs from ExxonMobil and other industry players following the introduction of a robust law, it must still avoid “biting off more than it could chew” says Analyst at Americans Marketing Intelligence (AMI), Arthur Deakin.
Deakin alluded to the fact that Guyana needs to have a law or policy in place that acknowledges the capacity of the country to meet the targets that oil companies may be asked to meet. He also commented that harsh fines for noncompliance can hurt Guyana’s local content ambitions while adding that any local content law that is being put in place has to be subject to continuous revision. The analyst posited that a constantly evolving local content rule will also allow for greater Guyanese participation as the industry develops.
Making reference to Brazil, the analyst was keen to note that its original local content rules for its pre-salt oil production included disproportionate fines for non-compliance and bottlenecks that hurt the construction of FPSOs. With this in mind, Deakin argued that if local content requirements are too onerous from the start, or not aligned with the local industry’s expertise, the development of projects will be delayed, and foreign investors may be hesitant to enter the country.
The AMI Analyst said, “This is not to discourage active participation by local citizens, but rather, to protect Guyana from ‘biting more than it can chew.’ Despite its eagerness, Guyana is still developing the capacity to handle the uptick in work. As it stands, Guyana lacks the volume to address one FSPO—not to mention the many more that are being developed. Guyana also lacks the tools to provide widespread training for its citizens.”
To address this under capacity, Deakin opined that the government should use some of its newfound wealth to provide financial and structural support for locals seeking to obtain the necessary skills to succeed. He posited that this could include the creation of an Oil and Gas Institute or improved university courses specifically focused on extractive industries.
