Vice President, Hon. Dr. Bharrat Jagdeo says local content must be measured by the value of the contracts given to Guyanese firms by oil companies, rather than the amount.
During his guest appearance on a Facebook live interview with the ‘Guyanese Critic’ on Thursday, the Vice President said he noted this advice from Trinidadian energy strategist, Mr. Anthony Paul.
Vice President Dr. Bharrat Jagdeo
Dr. Jagdeo explained that a company can easily say it hired 20 Guyanese to provide food supplies, but omit the truth about quantity.
“And when you check the 20, they’re only supplying two baskets of bora or mangoes, and the bulk of it is coming from one big supplier from abroad.
So, if you measure by volume, it would say 20 Guyanese versus one foreigner supplying food. But when you look by value, you’d see that they are earning a pittance,” he said.
Mr. Paul, a local content expert who serves on the Government’s local content advisory panel, is quoted in Kaieteur News as saying “I like to think of local content as something we can measure because if we can measure it, then we know how well we are doing.
People often describe local content as the number of people employed; the number of companies engaged. But remember, every activity has to be budgeted for. As such, I like to think of local content in a monetary sense. I ask, ‘what is the value of inputs for the activities being carried out in the sector?’”
Dr. Jagdeo said the Government will enforce the principle of measuring what oil companies are doing, and “not to leave it just at their word.”
The Government’s draft local content policy saw widespread consultations with industry stakeholders, through a process spearheaded by President Dr. Mohamed Irfaan Ali.
The Government drafted the policy, after a report, which incorporated stakeholders’ views on the way forward, was submitted by the local content advisory panel.
Government intends to set stipulations in law to ensure contractors facilitate maximum penetration for locals in the oil and gas value chain.
During a stakeholder engagement with Trinidadian Petroleum Specialist, Anthony Paul, Georgetown Chamber of Commerce and Industry President, (GCCI)Deodat Indar said the Private Sector would like to see better analysis on the local content policy framework.
Trinidadian Petroleum Specialist, Anthony Paul shaking hands with Georgetown Chambers of Commerce and Industry, Deodat Indar.
On Wednesday, the Ministry of Natural Resource began consultations on the draft local content policy framework for the oil and gas sector. Thursday’s seminar was hosted at the Ministry of Natural Resources at the ministry’s boardroom, Brickdam.
The GCCI president stated that as it relates to Guyana the situation and culture differs, hence the need for a proper long-term analysis of, “what we can ring-fence for the sake of our people”
Indar noted, “We do not want one year from now, Guyanese people are investing their money, setting up systems, becoming certified and they can’t get a chance at a contract.”
During the today’s engagement, Indar suggested some policy points he believes need to be addressed by the drafters. “The policy should address clear language, it should not just be in broad headings and people cannot read through it. It should flesh it out so people can see it clearly” he urged.
The GCCI president said he believes the oil industry will be one of the biggest drivers of the economy in the next decade, thus major oversight is needed.
“Such a large resource must have the broadest oversight possible to make sure that we get the best value from that resource we are popping out of the ground. And I think we understand on a macro level where this policy should be.”
Indar continued, “I think we are in agreement on most of it, but its working out the details to make sure our people do not get a disadvantage nowhere once we implement.”
Consultant, Anthony Paul explained that the local content policy is just a draft initially, “This is the first iteration of it. It
Some of the oil and gas company representatives at the local content policy engagement with Trinidadian Consultant, Anthony Paul.
wasn’t meant to be a perfect document. It is not. It will be improved as we go along.”
In terms of local participation in the oil and gas sector, Paul said “the policy will target Guyanese participation in things that are viable and sustainable. There is a whole host of possibilities, not everything Guyana will want to go after.”
However, he believes the oil and gas companies will be best suited to take the industry into the exploration phase, since they are already equipped with the necessary knowledge. He further explained that the government will have the upper hand and will lead in guiding those companies.
Paul opined that the afternoon session, which engaged several oil and gas companies was quite useful and productive, since the government and the oil companies are in agreement with the policy. “I believe we are on the same page. When I say same page both the Government of Guyana and the oil companies in terms of the need for collaboration, he said.
The meeting resulted in the oil and gas companies giving full support of the local content policy draft and will in the future work to assist in the training of Guyanese personnel, who will benefit from job opportunities within the oil and gas sector.
The Ministry of Natural Resources is currently engaging stakeholders on the local content policy before it is finalised.
The Ministry of Natural Resource began consultations on the draft local content policy framework for the oil and gas sector. The event was held on Wednesday, at the Marriott Hotel, Kingston Georgetown.
The local content policy was developed with input from Consultant Anthony Paul. The Trinidadian Petroleum Specialist conducted a rapid assessment of Guyana’s preparedness for an oil and gas industry, facilitated by the United Nations Development Programme (UNDP).
Minister of Natural Resources, Raphael Trotman delivering brief remarks.
During his presentation, Paul explained that the policy framework seeks to address issues like good governance, beneficial ownership and capacity building.
On good governance, Paul stated, “Good governance and we know that term, but how does that actually work, and the policy framework tries to address that, how do we get good governance of the sector to ensure that value below the ground is translated to benefit above the ground.”
In the case of Guyana, Paul said that the resource is huge and potentially transformational, and therefore “ It needs to be addressed, as it is something that has a significant impact and therefore has to have the eyes of government on it.” Guyana has already established a ministerial committee, to look at the beneficiaries and implementors of the oil and gas sector, which is commendable, he said.
Paul explained that capacity building does not only apply to people, but also to infrastructure. “ You can’t provide fabrication to offshore facilities, unless you have a shore-base that has the ability to import raw materials and export to the offshore facility,” he opined.
The consultant believes that the new oil and gas sector presents a number of opportunities for Guyanese. He explained, “ Most of the money goes to drilling and well services, and in engineering and construction and so, you always hear ‘those are the high technology areas and we can’t get involve in that’ but… each of these things have multiple component parts that are built up to make them, so to provide drilling services, a drill ship is required, that drill ship needs fuel , it need supplies, food and water, persons to provide services such as cleaning and maintainance, logistics ships helicopter.”
Trinidadian Petroleum Specialist and Consultant, Anthony Paul, during his presentation.
Paul said that another aspect the local content policy will address, are the component parts that are needed and how can Guyanese can go after it, and where is the value.
Local content is the input of local firms in the development of an industry. In this case, utilising local services from exploration, production and final product of Guyana’s oil.
Minister Raphael Trotman said the aim is to have the national, local content policy guide future businesses. He said that it the government’s hope that this framework becomes, eventually, a national model for local content, be it in the mining or forestry industry.
“Government will never pretend to have all the answers, like you this is new to us and that is why we have turned to international experts and some here in Guyana. We need partnerships,” Minister Trotman said. He noted that the government has been working with the Political Opposition, ensuring that they have a regular briefing from Exxon Mobil.
A section of the participants in the event.
He noted that at the end of this process, which will be taken all across the country, the government hopes to have a National Local Content Policy.
Meanwhile, Go-Invest’s CEO Owen Verwey said the policy encourages joint venture partnership which would see local content being maximized.
Verwey encouraged local businesses, educational institutions and government organisations to make the best use of the opportunity, and ensure that the document, once completed, covers their interest and provides them with the awareness of the opportunity and how best to target them.
The Ministry of Natural Resources will facilitate engagements across the country on the policy before it is finalised. The local content policy framework is expected to be completed before the end of the year.
The oil and gas sector can develop high standard technical and vocational skills which can be transferred to other sectors according to energy expert, Anthony Paul, a Trinidad National, who serves on Guyana’s Local Content Committee.
Anthony Paul, consultant to the Ministry of Natural Resources
In a recent interview with the Department of Information/Government Information Agency (DPI/GINA) Paul pointed out that there exists a myth over the types of jobs available in the oil and gas sector.
While engineers and geologists are necessary skills in the industry, for Guyana, the job opportunities lie in technical and vocational skills. “You ask where the jobs are. Technical and vocational skills are very important,” Paul said.
Guyana is preparing for oil production sometime in 2020 after significant oil find in 2015.
Paul pointed out that Trinidad and Tobago “did well” at developing those skills with apprentice programmes in its oil and gas industry. “There are many more as welders, fabricators, mechanics, people doing diesel machine.” “You have the cornel of that in the schools; they may be distressed at the moment but do you rescue that culture and use it to build those areas?” Paul asked, while noting that, that it is a decision for the government to make.
Learning welding at the Guyana Technical Institute
More importantly, these skills are transferrable.
In Trinidad’s case, Paul noted that the twin island state’s oil and gas sector only employ about four percent of the workforce but more than 20 per cent of T&T’s workforce is trained in some technical or vocational skill.
“How do you think they got that skill because the oil industry needed the skills and invested in the schools? If you train 100 technicians and the industry hires 10, 90 are available for elsewhere,” Paul illustrated.
Additionally, these skills when transferred can also raise the standard of the sectors they will be used in. “If you learn that in oil and gas you learn that at a high standard and therefore when you transfer it you elevate the other sectors,” Paul explained.
However Paul cautioned that developing technical and vocational skills must not be done at the neglect of high end skills. “The other high end skills are of value too and you want to focus on those as well but we tend to focus on the operation(of) technical skills,” he said.
If we fail to develop the high end skills we end up using the same foreigners that we had to bring into the country to do the job, Paul explained.
Students of GTI learning technical and vocational skills
The government has to be strategic in how it develops skills for the industry Paul cautioned. Paul used Ghana as an example of how this did not work out, “A lot of families spend money on children doing studies who are unemployed now.”
Over the last two years Paul worked as an advisor to the Ghanaian government developing and putting regulatory systems in place for their Ministry of Petroleum.
“Guyana has to be careful about what training you spend your money on”, Paul said. The government is cognisant of this and has been making provisions for developing skills both technical and high end.
The Ministry of Natural Resources through the Guyana Geology and Mines Commission (GGMC) has committed $100M over the next three years to boost UG’s training capacity for the oil and gas industry.
Additionally, the Ministry has partnered with the Mexican Petroleum Institute. That partnership includes scholarships from the Institute particularly in technical and vocational skills. There are also plans for the establishment of a local Petroleum Scientific Institute by 2020.
Anthony Paul is currently a consultant to the Ministry of Natural Resources on the development of a Local Content Policy for Guyana’s oil and gas sector.
Guyana’s Local Content Policy encompasses existing realities with the aim of improving skills in the future, according to oil expert and consultant on the policy Anthony Paul. Concerns over what Guyana’s Local Content Policy should entail have been discussed since the country’s significant oil find in 2015.
The government is expected to finalise its Local Content Policy by August and Paul, who is a consultant with the Ministry of Natural Resources on that Policy said it has taken the Guyanese reality into context.
Anthony Paul, consultant to the Ministry of Natural Resources on the Local Content Policy
“It lays out the context; Guyana has limited number of people, limited skills, limited experience therefore there’s a growth path and lays out how we do it and then it says how you make sure it gets done,” Paul told the Department of Public Information/Government Information Agency (DPI/GINA) in a recent interview.
Paul noted that the policy is pragmatic. “We have to understand what’s needed, build the capacity; you have to make sure that the companies in procuring goods and services target the locals to get them to participate and building support systems to improve their performance,” Paul explained.
He pointed out this requires a holistic approach and prudent management by the government. “The Ministry of Finance has to understand where the bottlenecks are for local content and make special provisions for that. The Ministry of Education has to understand that the skill needs are going to be different,” Paul explained.
There is a review mechanism built into the policy so adjustments can be made as the oil and gas sector expands Paul said. The Minister of Natural Resources had previously told DPI/GINA that a draft of the Policy has been shared with the local business community.
Paul cautions the expectation of immediate benefit from Guyana’s new oil and gas sector. “The temptation is to show people benefits. That can lead to all kinds of behaviours, now what a country like Guyana has to say is listen we could do all kinds of things now and damage our children’s future or we can manage this for our children’s benefit,” he pointed out.
He noted that Policy is crafted in such a way to develop opportunities for skills that can be used across sectors. “It’s finding the opportunities to increase capacity that can support the sector that can be used in other sectors. So we talk about it, the backhaul linkages, linking to services and the lateral linkages, linking to ancillary industries or other industries that can support it,” Paul said.
Anthony Paul is a renowned energy expert with 38 years of experience in the sector. The Trinidad and Tobago national has served as an advisor to governments new to the oil and gas industry across the world.
