Integrate Procurement rules with local content efforts

Mar 05, 2018 News

–Int’l Oil and Gas Consultant

In order to ensure that a significant portion of local services and products are utilized by foreign companies in the oil sector, procurement rules/guidelines and strategies must be employed at all times.
This advice is what Chatham House has passed on to many countries seeking its help in the oil and gas sector. Chatham House is a non-profit, non-governmental organization based in London whose mission is to analyze and promote the understanding of major international issues and current affairs. Government has claimed that it is consulting with and using the advice of the organization.
The organization has strong rules and principles when it comes to local content.
Chatham House notes that in a company’s operations, local content strategies sometimes reside in separate units or in the CSR department. This means local content is often a later consideration in the planning process.
The organization says that a requisite local content ramp up of supplier skills and capacity may be developed too late in the design and engineering process to provide timely local goods and services to the project.
It notes that operators have considered various organizational models for handling local content. Industry discussions recognize the risk that if local content sits with the procurement unit, opportunities for optimizing local content are missed. To avoid this, Chatham House says that different models are being considered to front-load strategic thinking in regard to local content and to better assess the trade-offs that companies must consider between different objectives, such as managing long-term risks versus minimizing costs.
To ensure early consideration of local content, Chatham stressed that governments can request that companies embed local content in their initial procurement strategy when preparing their field development plans. It said that integrating local content objectives into procurement strategies and engineering plans can significantly increase the impact of efforts to benefit the local economy.
GUYANA’S CONTRACT
Several Production Sharing Agreements around the world have embedded in them, strict procurement rules which must be followed by oil operators. This is the case with Ghana for example.
Guyana’s contract however, mentions NOTHING about procurement laws that ExxonMobil must follow.

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