Huge discrepancy exists between Exxon, Govt. 2022 local content estimates

May 22, 2023 News

Kaieteur News – No one can dispute that the Local Content Act is a law that will bring in significant benefits for Guyanese businesses and Guyanese nationals. But one must always be cognizant that such optimism does not result in an overestimation of the government’s achievements. Kaieteur News has observed a massive difference between the estimates of local content for 2022, provided by ExxonMobil and the Local Content Secretariat.

Director of the Local Content Secretariat, Dr. Martin Pertab said at the International Energy Conference that Guyana got US$700M from local content in 2022. “Based on the latest estimate, and of course, we have received the half year’s local content plan that was submitted as of June of last year, and we are in the process now of receiving the performance report, we have estimated that local content has brought in an additional US$700 million in businesses,” Dr. Pertab said in February.

However, ExxonMobil released a statement last week, which estimated the local content spend was just US$400M in 2022 in support of its operations. “ExxonMobil Guyana and its reporting contractors have spent more than $80 billion (US$400 million) with more than 1,500 Guyanese businesses in 2022 alone,” the company said as its 2023 local content plan was approved.
This US$300M difference in estimates is staggering. One can argue that oil sector spending is not limited to ExxonMobil and the Stabroek Block. However, operations related to other blocks were minimal compared to that of Exxon’s operations, and certainly did not account for more than 40% of local content spending in 2022.

While Exxon drilled 10 exploration wells in the Stabroek block in 2022, the only outside exploration well drilled was the Beebei well in the Kanuku block by Repsol. CGX Energy had intended to drill Wei in 2022, but had to postpone exploration drilling because the rig was in use in Trinidad beyond the contract period. ExxonMobil has also been undertaking development drilling to support multiple projects.

The Local Content Secretariat would do well to account for this massive US$300M difference, lest it opens itself to accusations of bloated or overoptimistic achievement.

Meanwhile, Attorney General and Minister of Legal Affairs, Anil Nandlall said the government has commenced a review of the Local Content Act 2021. Announcing this recently, Nandlall said “We continue to receive complaints in relation to the local content framework and the local content legislation. Reports indicate that Guyanese citizens are being denied fair opportunities to participate in the oil and gas sector and related industries.”

The government is looking to add more services to the Act, which currently mandates that goods and services are procured from Guyanese nationals and companies in 40 areas.

• Exxon, govt, International Energy Conference, Local Content