By Kiana Wilburg
An effective Local Content Policy is not possible without an assessment of the country’s ability to provide goods and services to the petroleum industry.
And for Guyana to be successful in its endeavours to complete such a policy, Attorney-at-Law, Nigel Hughes is calling on the framers of the draft policy to urgently gather data on the country’s strengths and weaknesses.
“We first have to harvest data on what our immediate capacity is and what our short, medium and long term capabilities for local content are. There is no point having a Local Content Policy that is not based on existent reliable data on what we have and how we could migrate over the short, medium and long term areas in which we can actually provide services at competitive prices.”
He added, “The important thing about local content is that we want to remain competitive. We want to keep an eye on being competitive… I think we need to establish a world class, deep water oil industry that in terms of competitiveness, it is second to none. We have to set up the overall framework and then factor in local content in that context rather than just positioning it as an objective without baseline information.”
To his knowledge, this baseline data on the existing needs and capabilities of the nation has not been harvested as yet.
Quite often, local content policies are designed without sufficient consideration of the resources available nationally and the changing nature of these resources. They are also done without co-operation with partner companies.
It is in this vein that another international organization, Chatham House, called on Guyana to be cautious in its design of a Local Content Policy. It stressed that in the haste to have such a policy, Guyana must avoid simply mimicking other countries’ local content policies.
It is urging Guyana and other emerging oil producers to first develop a “thorough understanding” of the local context. This would include the scale of discoveries, availability of skills and infrastructure, availability of oil/gas in country etc. The global organization said that governments should then assess what skills will be needed through the lifecycle of the project(s). It said that this can be done in collaboration with foreign oil companies. The organization stressed that this assessment should be the basis for defining local content policy and targets that would be realistic and achievable.
Once this is done, Chatham House said that the Government should focus next on capacity-building by requiring investors to develop the workforce and the supply base. It said, “For many emerging producers, the starting point in terms of demands on foreign oil companies should be local sourcing of simple on-site services – construction and consumables for workers, for instance. They should avoid the delivery of turnkey projects run by foreign staff.”
Further to this, Chatham House said that governments of emerging oil producing nations must facilitate foreign oil companies’ efforts to develop the local supply industry and workforce. Specifically, Chatham House said that the government should link local content policy in the oil sector to its broader education strategy and build the kind of workforce that is able to respond to the country’s future needs.
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