When it comes to the discovery and monetization of any resource, local content is, of course, an important factor to be considered. But the very definition one gives to this term is what makes all the difference in the world.
According to Natasha Gaskin-Peters, Director at the Centre for Local Business Development, one might consider local content in the context of spending with local companies or the employment of citizens. The Director insists however that the contemplation of local content in its truest sense must incorporate economic implications of lost value.
During her participation in Part One of OilNOW TV’s Local Content Webinar, the Director posited that one must look at leakages within the economy when analyzing local content. Expounding on this front she said, “I would have spent on a local company but if that local company is importing supplies then that becomes a leakage and so that has to be taken out of spend before I can get the true local content. So as Guyanese, as we think about local content, when we remit profits abroad or if I am a local company and I am not reinvesting my profits in-country, then that is a leakage.”
Further to this, Gaskin-Peters said that as oil companies spend on local businesses, one would want to ensure that the money is kept in the economy and reinvested since this is what would foster economic growth in-country. She said, too, that this is the message that is being driven home to local suppliers. The Director said, “This is why ExxonMobil and its partners prior to final investment on their Liza Field, made that decision to invest in local content and of course that is good for business… With the sourcing of supplies in-country, it can become cheaper and so a lot of the operations have moved in-country.”
The Director added, “SAIPEM for example recently put together their fabrication yard in Guyana and there is the shore base facility that we have in-country and there is a tender out for another. So we are seeing things moving in-country but as we think of spending on companies and workforce, we have to think of leakages.”
She said that Guyana has to ensure that spend is not just on pass-through items for just a small markup to invest in things. By addressing this crucial area, the Director believes Guyana would be on its way to ensuring the true definition of local content is realized.
