Dear Editor,
I often share with my students the idiom ‘Once bitten, twice shy’ which in Guyanese parlance is ‘Once bitten, twice bite-up’.
Language is important and often determines context. Language also creates boundaries and drives and defines both beliefs and actions. Guyana is eagerly awaiting the draft of its first local content Bill which will define how it approaches the inclusion of Guyanese in the developing oil and gas industry.
I believe Guyana should not use the terminology ‘local’ content but instead use the terminology ‘national’ content. Whereas the word ‘local’ is relevant to developing countries, that same term restricts resource-rich developing countries such as Guyana from truly benefiting from their national patrimony. Local content has an international meaning and when one reads many trade agreements, the terminology is purposefully absent.
Guyana needs a ‘national’ content Bill that is both a policy and a development ‘philosophy’. Whereas a local content Bill is about an economic paradigm, a national content bill is about economic and foreign policy.
President Trump has been speaking about local content (local jobs, revitalization of old industries) but in reality he is making American foreign policy and he does not use the terminology local content.
Guyana’s national content Bill should have at least 5 key mandatory dimensions. The first is ownership by Guyanese. This implies the onshore oil & gas facility must be at least partially owned by Guyanese through investment or carried interests. So also should any refinery. Land should be correctly defined as national equity and should not be leased without national ownership.
The second essential national content element should be management. Much more oil will be found in Guyana within the next decade. As such Guyana needs to have the human resources strategy that will enable it to manage its own state owned national oil company as do China and Saudi Arabia, among other countries, which control the management of their national patrimony.
The third essential third element is skills development. Guyana should ask all the foreign firms, namely: Esso Exploration & Production Guyana Ltd (EEPGL) which comprises ExxonMobil Corp as operator (45%); Hess Guyana Exploration Ltd. (30%) and CNOOC Nexen Petroleum Guyana Ltd (25%) as well as all of their global subcontractors (SBM Offshore, Fugro, Halliburton) to have management and skills development programmes which will involve sending young Guyanese overseas to obtain such skills and experience in a prescribed ratio that for every expat on the project, there is a corresponding Guyanese under training overseas. This will result in sustainable knowledge transfer.
Guyana will ultimately become a very large producer of oil. Mandatory skills development should therefore be a necessary prerequisite for all foreign entities operating in Guyana’s sovereign space as part of national content Bill.
Mandatory local procurement is the fourth critical element. Currently hundreds of jobs, products and services are being obtained out of Trinidad and Tobago at the expense of Guyanese. True, Guyana may not have these skills now.
However, this has to change over time, but must be mandated now. There is absolutely no reason for food to be bought in Trinidad and elsewhere when Guyana has more food than any other country in the Caribbean. And there is absolutely no reason why workers from other countries are heading to any oil rig in Guyana’s sovereign waters without passing through Guyana’s Customs and Immigration processes.
Finally, corporate social responsibility (CSR) is an essential part of a national content Bill. In this area, the Government of Guyana must be congratulated, as recently in December, 9 priority areas for consideration by foreign entities were presented, and are available in a booklet. CSR should be prescribed as a national imperative and not a corporate one.
Guyana has also signed on to the 2030 Agenda with its 17 Sustainable Development Goals which promote inclusive growth. As such the Government of Guyana has to work with all stakeholder communities to ensure equitable participation in Guyana’s oil & gas patrimony.
Yours faithfully,
Eric Phillips
