Ahead of the tabling of the much touted Local Content Legislation, ExxonMobil has announced that it will be building its own shorebase facility for the yet to be approved Yellowtail project.
With this move, Exxon will effectively shut out some of the local companies that have been investing in shorebase facilities here in the hope of cashing in on the oil boom.
The announcement comes at a time when there is quiet over the management of the petroleum sector here and the lack of adequate local participation.
U.S company made the announcement last week at a private sector forum in the presence of scores of businessmen and even government officials including Vice President Bharrat Jagdeo. It is not clear whether this matter was raised by civil society representatives when they met with Jagdeo at a consultation last week on the draft local content bill.
Back in August this newspaper reported that a group of local entrepreneurs have pooled their resources with the intention of establishing a US$200-600 million base port facility called ‘Port of Vreed-en-Hoop’ which will have the potential to service Guyana’s offshore oil and gas and other shipping needs.
According to a project summary shared by the Environmental Protection Agency (EPA), the port is projected to be located at Foreshore, Plantation Best, West Bank Demerara (WBD). The Company proposing the project is NRG Holdings Inc., a consortium of three local entrepreneurs attached to businesses with between 38 to 49 years of experience.They are ZRN Investment Inc. located in Kingston Georgetown and represented by Andron Alphonso; Hadi’s World Inc. located on Lombard Street and represented by Nazar ‘Shell’ Mohamed and National Hardware (Guyana) Ltd, located on Water Street and represented by Nicholas Deygoo.
Meanwhile, in a speech titled “The Role of the Private Sector in the Future of Energy in Guyana: An Industry Perspective” President of ExxonMobil Guyana Alistair Routledge told the Georgetown Chambers of Commerce awards ceremony last week that as part of the Yellowtail project, “we also plan to invest in a project shorebase that will enable an increase in fabrication and load-out activities in Guyana.”
Routledge said the projects that are currently taking place in the Stabroek Block provide a foundation for growth of the private sector.
He said it is difficult to overestimate the scale of what is taking place. The Liza Destiny began production in December 2019. Currently, the government has received nine lifts of one million barrels each, which combined with royalties has resulted in more than 500 million US dollars in revenues.
Routlege said the Liza Unity arrived in Guyanese waters in late October of this year and is expected to begin production early next year. The Unity’s production target is 220,000 barrels per day, a significant jump up from the Liza Destiny.
“We have a third project approved by the government, Payara. The Prosperity is under construction in Singapore and expected to sail for Guyana in 2023. And of course, as many of you know, we are currently in discussions with the government regarding the field development plan for the Yellowtail Project. Then, there is the Gas to Energy project which will deliver lower cost electricity and be a cornerstone of the Wales Estate Development,” Routledge said as he talked up his company’s investments here.
According to him these projects cumulatively represent around 30 billion US dollars of foreign direct investment in Guyana that will generate billions of US dollars revenue to the country over the coming years.
“In total, we believe there is scope for up to 10 projects on the Stabroek Block offshore Guyana. We have an active exploration programme offshore where we have made an additional five discoveries this year.
This is the foundation in place, and it goes well beyond ExxonMobil Guyana. This line-up of projects is the basis for planning among our major contractors, many of whom have opened headquarters here.” The Exxon boss said to date, all of the major international oil and gas contractors have a presence in Guyana and have steadily been moving activities from the United States, Brazil and Trinidad and Tobago. “Almost the entire supply chain for our offshore activities have been relocated to Guyana. This has created opportunities for the Guyanese private sector— whether it is build-outs for shorebase, warehousing, or waste treatment facilities. ”
Meanwhile, the first schedule of the draft local content bill notes that the Government of Guyana will work with local companies to realise a range of additional business benefits in terms of building sound relationships with project-affected communities; establishing and maintaining a social licence to operate; capturing the performance and efficiency benefits of a qualified local workforce; and developing cost-effective, efficient, and responsive supply chains.
The document notes that local content must be a means to promote economic development by creating opportunities for the Guyanese labour force and business sector in defined area of work where the skills are available. Thus, Guyanese company must mean any company incorporated under the Companies Act with at least 51 percent of its equity shares are issued to Guyanese Nationals or Guyanese companies
