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At the time of writing this column, our neighbour to the West—for whatever domestic, international, geo-political or other reasons—are engaged in a critical nationwide Vote/Referendum, that essentially threatens two thirds of the majority of Guyana, namely the entire County of ‘Essequibo.’
A January date has been announced for a planned military invasion, so Guyanese, will be paying rapt attention to the machinations of its Spanish speaking neighbours as will the world.
As indicated before, whatever the reasons, as a businessman with international experience particularly in the US and with hydrocarbons generally, I can safely say the machinations to the West are no doubt rooted in one way or another in OIL, our oil to be more specific.
Another image that is increasingly being portrayed internationally, in relation to Guyana, is the increasing accolades for its management of its still nascent oil and gas industry and equally, praises for a more equitable distribution of the nation’s earning’s, more so, from that industry specifically, under the guise of the now statutised ‘Local Content’ protections in the Local Content Act.
This law was introduced by the Guyana Government, and was, and has always been intended, or meant to protect the indigenous population, or more specifically, born and bred Guyanese’s right to earn, from specially carved out niche markets and such.
Two thoughts come to mind here. The road to hell is paved with Good intentions! And. There are lies, damned lies and then there are statistics. As a businessman, I will restrict my commentary this week to the latter, and Guyana’s Local Content Law/Policy and its now vaunted successes.
Admittedly non other than the Vice President himself, Dr. Bharrat Jagdeo and the subject Minister for the Oil Industry, Honourable Minister of Natural Resources Vickram Bharrat, have both, indicated that overtime this law will evolve to adapt to the times, and to meet the capacity of the domestic resource capacity to adequately cash in on what the world is running Guyana’s way to do. Last week, I implored, If our leaders do not intend to guide us or are unable to, then let us teach ourselves how to cash in on our oil wealth.
This past week in perusing the daily news, I came across a report that quoted again, legitimately even more statistics on Guyana and its oil sector, more specifically the performance of the Local Content Law and the earnings had by Guyanese.
According to that report, Local Content earnings for the first half of 2023 have already accounted for US$322M, which has gone directly into the pockets of Guyanese service providers. The Government has meanwhile projected that Guyanese will earn US$720M by the end of the year within the 40 carved-out areas under the local content framework.
The figures referenced were made public and subsequently never challenged by Head of the Local Content Secretariat, Mr. Martin Pertab, during a recent press conference. He also at the time revealed that some US$518M was categorised as expenditure under procurement and that these predictions were made by utilising data from annual plans submitted by registered companies, as well as from data garnered from actual expenditure over the half-year period.
“As of June 2023, our actual expenditure related to the 40 carved-out areas was somewhere around US$322M, representing 62 per cent of the annual target. We have also seen an increase in new hires…We have seen a 24 per cent increase in Guyanese hires.”
There are 840 local companies registered to provide services under the Local Content Secretariat, he said, which translates to employment for 33,943 Guyanese directly and indirectly linked to supporting the sector.
Even more troubling, a recent delegation of Members of Parliament (MPs) from Canada, who were in Guyana for a five-day visit, appeared to have been duped by ‘Lies, Damned Lies and, or Statistics.’
The delegation was led by Canada’s Assistant Deputy Speaker, Ale andra Mendès, who noted in a broadcast sit down with the State media afterwards that Guyana is on the right track when it comes to managing its oil resources equitably.
“Citizens will expect it, from their Government and from all the players that are here now, to develop the economy, that it won’t just benefit foreigners, it will benefit the people of Guyana. So absolutely, the economic development of this country relies now on
that, but it also relies on the traditional both agriculture and mining industry that have been the mainstay of Guyana’s economy before.”
The above content refers specifically to the Local Content Law and earnings that can, and have been tracked, using that system to quantify Guyaneses’ cash earnings specifically from the sector.
But what about real earnings as a result of the hydrocarbon (oil and gas) operations ongoing in Guyana’s Exclusive Economic Zone (EEZ), in its offshore Atlantic jurisdiction.
It must be borne in mind at all times, that every business has overhead costs in which the owners of the business alone do not profit. You, for example, even if you operate a small grocery shop or store at least one group of businesses outside of your circle is bound to benefit. Utility companies. Guyana Power and Light (GPL), and of course the Guyana Water Incorporated (GWI).
The point is, in every business more than one side, person, parties or interests, benefits. Which brings us back to the equitable distribution of the wealth of the earnings being made in Guyana’s oil and gas sector.
Not as a result of the Local Content Law specifically, but earning from OUR OIL generally and more importantly, what are we as a people doing about it in order to secure a bigger piece of OUR OWN PIE.
ExxonMobil Guyana and their partners, Hess and CNOOC have already announced ‘line-of-sight’ for 10 Floating Production Storage Offloading (FPSOs) or oil production facilities in operation in the Stabroek Block ALONE, simultaneously.
Having announced that publicly, and given the nature of the industry with regard to how an oil field is regarded in terms of its reserves and the listed categories such and Proven, Probable and Possible and others, I will bet my last dollar that those oil majors have already seen beyond 10 FPSOs in the Stabroek Block ALONE.
There are a number of others already exploring in Guyana. CG Energy Inc., just to name one, and only recently a number of new oil blocks were awarded in just completed auctions, in which successful bidders had to lodge non refundable signing bonuses once successful.
Taking the above into context, and more specifically what Guyana earned out of the TOTAL PIE, ask yourself, was the distribution of money to be made or had, just from supporting the operations alone, distributed, or earned equally.
Guyana got according to Mr. Pertab, as of June 2023, out of 40 especially carved-out areas around US$322M. But where was that earned from where really? That was a slice of earnings in which overhead costs benefit all in a position to cash in. How much did Trinidad and Tobago and Trinidadians operating in Guyana earn?
How much did the Americans and other nationalities working and earning in the industry earn, versus what we as Guyanese earned directly. Was it really equitable?
Guyana’s leaders have already signalled in no uncertain terms an apprehension, at least in changing the ‘Ring Fencing’ arrangements in the Production Sharing Agreements (PSA/Oil contracts) signed, or will in future the ramifications of which are for another Column.
If as a Guyanese you believe that you as a people did not earn fairly, or equitable from its oil wealth, then remember that money is coming directly from the 75% of the gross production of all of OUR OIL daily. That is the money used to pay the Trinidadians, Americans and others.
We as a Guyanese people may not be ready to change the Abominable ‘Ring Fencing’ arrangements in place. But there is certainly nothing preventing us as a people from building our own capacity, to do what the Trinidadians, Americans and other nationalities earn in Guyana’s oil and gas sector and are being paid so well to do.
There is nothing demeaning about Landscaping, Renting and Catering food but those are not the goals we must set ourselves as a nation.
That does not transform an oil wealthy nation and its people for the better, that sets us up for continued exploitation. A failure to prepare, is preparing to fail, I was taught that in Primary School. ]
Let us not Fail Our People, Our Children and our Future. Again, if our Leaders will not teach us how to build the capacity locally to cash in, then let us be our brother’s keeper and help each other; learn something, then reach one and teach one.
