Greater O&G monitoring, contract compliance are priority in 2024 – VP

The content originally appeared on: INews Guyana
Vice President Dr Bharrat Jagdeo

As the country’s oil and gas sector continues to grow exponentially, the Guyana Government continues to work on building the best legislative and regulatory environment for the burgeoning petroleum industry.

Since taking office in August 2020, the People’s Progressive Party/Civic (PPP/C) has undertaken a number of measures to streamline the nascent oil and gas sector. This has resulted in major steps being taken over the past three years to strengthen the industry’s legal, regulatory and institutional frameworks and structures.

This year, according to Vice President Dr Bharrat Jagdeo, the focus will be on greater monitoring of the sector and ensuring better compliance with contract obligations.

“We believe this year we have to focus more on greater monitoring and contract compliance. So, the new law would necessitate and clarify data flow between companies. So, we would focus heavily on timeliness of data, the completeness of data, the assessment of the data when it comes from the oil companies, that it’s not just stored in a depository. We will then look at monitoring of production. These are all issues to focus on this year,” the Vice President said at a press conference last week.

Government has already noted that the main coordinating and oversight agencies have implemented systems that allow for both physical and remote monitoring of the offshore activities in real time. Additionally, in 2024, they will be undertaking key survey studies on the offshore blocks, to better assess the potential petroleum resources available for development and production.

Jagdeo explained that this is more an internal survey to gather all the data available relating to the oil and gas sector, specifically on the licensees operating here and the various oil blocks offshore Guyana.

Some of the framework strengthening done by the PPP/C Administration in the past three years include reforming the Natural Resources Fund (NRF) Act; passing the Petroleum Activities Bill; introducing conditions for, and hosting, Guyana’s first oil blocks’ auction; reforming the model Production Sharing Agreement (PSA); strengthening the Environmental Protection Agency (EPA), as well as issuing environmental permits to operators.

Another key achievement of the Government is enacting, in 2021, Local Content Laws which allow for Guyanese and locally-owned companies to benefit from the opportunities in the oil and gas sector. The Act lays out 40 different services that oil and gas companies and their subcontractors must procure from Guyanese companies.

Efforts are now being made to revise the two-year-old law to expand these earmarked services, and also fix loopholes within the legislation.

“The Local Content Law, we’re now doing a complete review to see what worked; what didn’t work; what was effective; what was not effective; the loopholes that were exploited in the law; and then we’d have to make adjustments accordingly,” Jagdeo said on Thursday.

One of the issues that need to be addressed is the practice of ‘fronting’, or ‘renting a citizen’, by which some Guyanese companies and/ or individuals are entering into sham partnerships with foreign companies in order that those companies can capitalize on the benefits set aside for locals.

Back in August, Director of the Local Content Secretariat, Dr Martin Pertab, had announced that an Enforcement Unit had been set up within the agency to go after those companies involved in these illegal acts. Nevertheless, Government has reported that the Local Content Act 2021 continues to bear fruit.

In fact, since January 2022, contractors, sub-contractors and licensees reporting to the Local Content Secretariat have recorded 3,938 local hires, 785 of which were within the first six months of 2023. Of this total, 824 Guyanese were employed as plant and machine operators, 1,203 as professionals (accountants, lawyers, engineers, etc.), and another 485 as technicians. This brings the total number of Guyanese persons employed in the sector to more than 6,000.

In accordance with the Act, 33 companies operating in the oil industry have each submitted their five-year master plan detailing employment, procurement and capacity development, and these plans project growth by 601 persons in 2024, 509 in 2025, and 536 in 2026.

Also, in keeping with the Act, annual plans received from contractors, subcontractors and licensees amount to an estimated US$721 million in procurement of goods and services and training; above the $700 million in 2022 which covered 40 categories of services.

Current estimates suggest that US$518 million in goods and services had been procured from Guyanese suppliers in 2023. Of this amount, roughly US$15.8 million, US$5.5 million, and US$130 million were spent on providing accommodation services, catering, and lay down yard facilities respectively. Other major expenditures include the provision of manpower and crewing services, and ground transportation at US$74.6 million and US$13.6 million respectively.

Finance Minister Dr Ashni Singh, in presenting the 2024 Budget last week, said, “The implementation of the Local Content Act in Guyana has proven to be a catalyst for numerous partnerships between foreign and local companies, fostering a collaborative environment in the nation’s burgeoning petroleum industry.”

Some of these notable alliances include joint ventures and partnerships to provide shore base facilities ; offshore support vessel services; offshore helicopter services; offshore catering services; machining and fabrication services; and hazardous waste management.

“These partnerships not only signify compliance with local content provisions as stipulated by the Act, but also contribute significantly to business expansion, capacity development, and knowledge-sharing within Guyana’s petroleum industry, and augur well for the sector’s growth in the near and medium term,” the Finance Minister stated.

Dr Singh further noted that among the initiatives to be rolled out this year are: a paid internship programme, with the 45 Tier 1 contractors targeting approximately 100 paid internships; the development of an enhanced digital platform to allow immediate notification of employment opportunities and procurement needs; and local content sensitisation workshops to further increase awareness of opportunities that the Act affords.