Expert suggests setting up of Oil and Gas Institute, improved university courses to build local capacity

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Arthur Deakin

The Government should seriously consider utilising some of the resources garnered from the oil and gas sector to provide the necessary financial and structural support in order to help build local capacity so that citizens can take advantage of the opportunities that are afforded.

This is according to Arthur Deakin, an Analyst at Americas Market Intelligence (AMI) and Africa Market Intelligence (AfMI), where he conducts political, economic and other risk analysis activities for the mining, energy and infrastructure sectors.

Deakin suggested that the PPP/C administration should consider establishing an Oil and Gas Institute or invest in improved university courses specifically focused on the extractive industries.

“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 Floating, Storage, Production and Offloading (FSPO) —not to mention the many more that are being developed,” Deakin stated in an opinion piece published recently by Caribbean News Global.

According to the expert, at the moment, Guyana lacks the tools to provide widespread training for its citizens and to address this “under capacity”. He said the government should use some of its newfound wealth to invest in programmes that are geared towards ensuring locals are equipped with the skills needed to function in the oil and gas sector.

He posited that an even more important factor is a necessary cultural shift among Guyanese businesses, adding; “if Guyanese businesses lack the predisposition to go above and beyond in their contracting jobs, they may be overlooked when it comes to hiring”.

Deakin pointed out that the creation of an expert panel to develop a local content law is a promising start for the government as it shows that the administration is interested in doing the necessary review before approving a vital law.

Guyana’s Minister of Natural Resources, Vickram Bharrat, recently met with the advisory panel on local content.

Last Wednesday, the Guyana Government gave its approval for Exxon and its partners to go ahead with its U$9 billion investment for the development of the Payara oil field, the largest deal in Guyana’s history.

The Payara field is expected to produce 222,000 barrels of oil per day and will generate U$35 billion in government revenues. The deal also includes important environmental controls and a US$400,000 annual audit budget that should ensure project transparency.

Following the approval of the Payara license, the attention naturally shifted to passing a local content law which is expected to guarantee the participation of Guyanese workers and businesses.

To this end, Deakin outlined that a constantly evolving local content rule will allow for greater Guyanese participation as the industry develops. However, he 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.

Vice President Bharrat Jagdeo has assured that the next stage of their engagements with oil companies, particularly Exxon, will see the Government focusing on local content and the gas to energy project.

Jagdeo was of the view that a robust local content framework will help to reclaim benefits that Guyana lost from the deficient agreements the former Government entered into.

“We hope those will bring significant benefits, clawing back some of the losses on the fiscal side that we had in the production agreement… we’re developing a Local Content Policy that will see this and all oil companies spend more on Guyanese business and Guyanese people being employed, at fair pay,” Jagdeo said.

Jagdeo had also previously urged oil companies operating here to play their part in helping to build the capacity of the local workforce and to ensure that local businesses are given a fair chance of benefitting.