In the first six months of 2024, local companies earned a substantial US$314 million from the oil and gas sector, according to Dr. Martin Pertab, Director of the Local Content Secretariat.
Dr. Pertab made this disclosure during the ministry’s press conference held on Wednesday last.
Guyana’s Local Content Law provides for Guyanese companies with the relevant qualification to be given priority in the oil and gas sector.
As required under the Local Content Act, companies submitted their half-year reports to the Secretariat. According to the preliminary findings disclosed by Dr. Pertab, expenditure in the sector reached about US$314 million as of June 30, 2024. He said this represents 54% of the projected estimate for the year.
The Director also stated that the data also showed significant growth in various service areas compared to mid-year 2023, including a 238% increase in engineering & machine services, a 39% increase in accommodation services, a 48.5% rise in equipment rental, and an 18.8% growth in catering services. These increases are attributed to the heightened petroleum activities following the arrival of the third Floating Production Storage and Offloading (FPSO) vessel, which started producing oil late last year.
Moreover, Dr. Pertab highlighted significant progress made in addressing key challenges, including issues related to fronting and late payments, which have been a concern. He highlighted that the average payment period, which ranged from three to six months in 2022 when the Secretariat started, has been reduced to 35 to 45 days.
“As of now, we are in discussion with some of the major tier one companies, including the contractor, to have that payment period revised downward to 21 days,” Dr Pertab said.
Moreover, he stated that the Local Content Secretariat has been actively engaging with key stakeholders, including the Private Sector Commission and the Georgetown Chamber of Commerce and Industry (GCCI), to discuss policy directions and address challenges faced by local businesses under the local content law.
One of the key areas of focus has been the potential for subsea pipe-coating services in Guyana. Dr. Pertab explained that with the advent of the gas-to-energy project and the possibility of reducing energy costs by half, pipe-coating services could be offered here.
He said, “Once we can bring down that energy cost by 50%, pipe coating services is something that is highly possible would likely be done in Guyana which will likely boost local content activities in Guyana somewhere around 10%.”
Moreover, Dr. Pertab also shared success stories from local companies that have expanded their capacities significantly over the past year. He said this expansion for local companies has already resulted in a major contract order.
In addition, in the first half of the year, 54 new women-owned companies have registered with the Secretariat, offering services in catering, accommodation, food supply, and janitorial work. Dr. Pertab stated that a notable achievement was a female-owned company winning a major contract with a tier-one company, leading to a significant expansion from three to 40 employees.
He also provided updates on the Secretariat’s efforts to support the next generation of professionals in the petroleum sector. At the start of 2024, the Secretariat committed to placing 100 students among major tier-one companies to work alongside experts and upskill. To date, 53 students have been placed, with commitments to place the remaining students by the end of the year.
