By Raphael John-Lall
Consultants in the energy sector believe that policymakers at the Government level must do more to ensure that there is more local content in the energy sector that will lead to job creation and more business activity.
Local contractors in the energy sector provide a wide array of services such as drilling wells, cementing wells, supplying supply vessels that go offshore and providing labour.
Energy consultant Gregory McGuire told the Business Guardian that local content in the energy sector requires more attention from all stakeholders.
“My understanding is that currently many of the contracts that are being awarded in the sector, are bundled, making it difficult for local suppliers to qualify for these opportunities. The practice of bundling of contracts works against the spirit of local content, however, multinationals continually engage in this action.”
He gave the example of fabication of platforms as an area where there is local expertise.
“Fabrication of platforms is a prime example of a competence that is available locally and has been successfully tried multiple time. However, despite the capability and capacity being available locally, multinationals are being granted the approval for platform fabrication to be executed abroad. When this is done, not only are T&T’s people and businesses not benefitting from jobs, contracts and an injection of money in the local economy, through local spending, but the platforms that are built abroad benefit the economy of another country (Mexico or Gulf of Mexico), their local people are employed and service companies are engaged. After the completion of the platform abroad, the Government of T&T is required through cost recovery, to reimburse the multinational company for the percentage of spend to fabricate the platform.”
During the post-budget debate at the end of September, Opposition Leader Kamla Persad-Bissessar criticised the present Government’s energy policies and spoke about the importance of supporting local services companies, especially smaller ones in the energy sector.
“The Government and multinationals have also forgotten about local content. The multinationals are back to their old ways of hiring foreign service companies ahead of those owned by citizens of T&T,” she said. McGuire also said local service providers that have the competencies to perform tasks, and competitively participate in bidding processes, are being denied the opportunities even though they successfully qualify for the similar services regionally and globally.
“Local services companies are not always privy to opportunities in advance as the foreign service companies are, thus resulting in local services companies being unprepared to bid successfully, due to the short notifications.”
McGuire offered solutions and these include:
* T&T needs a high-level local content champion;
* The Government, through the Ministry of Energy should be more strategic and investigate opportunities within each project early, make the information available within the sector; and create initiatives to assist local service providers to prepare to bid successfully for these activities/projects;
* In order for local companies to be fairly treated, their capabilities need to be clearly documented and this database should be referenced before any contract is awarded;
* Additionally, multinational companies need to be transparent in their procurement of goods and services communicating the competencies required for each service, and measures that are required to close those gaps; and
* The Permanent Local Content Committee (PLCC) needs to be more visible/ involved in the energy sector’s affairs.
Use local labour
In an interveiw with the Business Guardian, consultant Kevin Ramnarine expressed his dissatisfaction saying that once the local skills and competencies exist in T&T, there should be no need for multinationals to use foreign manpower or other technical resources but instead they should use local content.
“I’m not happy at all about what I’m hearing from the local energy service companies. It seems they have no one to speak for them on matters of local content. A part of the problem is the silence on these matters. It seems we are in retreat when it comes to local content. We have a local content policy that was published in 2004. At that time, it was a strong statement from the Government and I think it had some effect. Policies however don’t have the enforceability of a law.”
Ramnarine pointed to Guyana as an example.
“In Guyana they passed a law for local content in 2021. It has pros and cons but I think it has caused many in T&T to sit up and ask questions about the adequacy of our own arrangements. Guyana was prepared to draw a line in the sand much like Norway did in the early 1970’s. In T&T, the lack of pressure on local content coupled with diminished activity has led to the decimation of the energy services sector.” He made reference to Central Statistical Office (CSO) data which shows a decline in employment in the energy sector. “In the third quarter of 2015, there were 22,500 persons with jobs in the energy sector. As of the second quarter of 2023, that figure is 8,200.
Where is the conversation about this? I don’t hear it coming from the Hyatt Hotel Ballroom. What caused such a drastic collapse?”
Finally, he urged local companies in the energy sector to continue to raise their standards up to international best practice.
“The other part of the equation is we ought not to push local content for local content sake. Local companies must be competitive and meet best practice in Health, Safety and Environment (HSE) standards. The fact, however, is many of them tick these boxes and are still mysteriously excluded. The question of legislating local content in the energy sector is bound to generate debate. Some see it as a barrier to investment and some see it as a necessary path to greater T&T participation in the energy industry. If it happens (post 2025), it has to be a balanced law.”
Government policy
The website, the “Energy Year” which publishes global oil and gas news, published an interview done with Energy Minister Stuart Young dated June 15, 2023 in which he acknowledged the need for the input of more independent operators in projects in the local energy industry.
“Independent operators have a vitally important role to play in T&T. The Ministry of Energy has mandated that Heritage open up its acreage. There are companies that are interested in engaging in farmouts and lease outs with Heritage. These smaller companies are nimble and if they have the capital available, and are willing to drill and to produce, then we will fully encourage the activity. They are critical not only to maintaining oil production, but to increasing it,” Young said.
(Trinidad and Tobago Guardian Newspaper )
