With Guyana yet to finalise a Local Content Policy for its budding oil and gas sector, local companies are being urged to take advantage of the opportunities that are available in the petroleum industry and capitalise on them.
This call was made by the Managing Director of Suriname’s national oil company, Staatsolie, Rudolf Elias.
He was at the time speaking during a panel discussion at the 2nd annual Guyana International Petroleum Business Summit and Exhibition (GIPEX). The discussion focused on “Strategies to ensure successful transition (from non-producer to oil producer) during the ‘big boom’”.
Suriname is currently producing crude from three onshore oilfields and despite several exploration exercises, it is yet to strike oil offshore. But even as the Dutch-speaking nation continues to test its basin for oil prospectivity, it has already taken steps to streamline stakeholders ahead of potential offshore discoveries.
In fact, the State-owned Staatsolie, which is also the country’s regulator for its petroleum industry, has been working on a local content strategy to prepare domestic companies for the future – something which its Head says Guyana can learn from.
“We looked at how we can manage our business society in such a way that they start to understand what they have to do in order to be a partner of choice for the foreign companies that come in if they want to start doing business in the offshore oil industry. We’re trying to bring our business society up to a certain level so they understand what the gaps are that they have to fill…” Elias explained.
The Staatsolie Head further outlined that they did an industrial-based study, where they looked at all the local companies with the potential to work the offshore oil and gas industry. They then we went out for performer tender, kind of like a prequalification, so that they can identify what the gaps are and where they have to work on.
“We give the industrial gap analysis from the [foreign] companies to the [local] companies so they know exactly where to work on and then we made a portal, where they can come to us to ask questions or we can put them on to the IOCs (international oil companies). And this works the other way around. If a company wants to know what is there in Suriname, we send them to the portal and we try to connect them to the right companies to try to work with us so that they can fill the gaps and they can form partnerships in order to have a better, quicker local content in our industry,” he stated.
Elias went on to note that this was not done only for the business society but also in the education sector, particularly at the technical institutes.
However, he noted that it is critical that the expectation of country be managed, adding that not everyone will benefit from the sector and those who would, will first have to fill the gaps in order to get in.
Moreover, Elias pointed out that pushing local content up to IOCs often works counterproductive. He noted that while foreign companies would prefer to have domestic partners, Governments need to be cautious about pushing too hard.
“Every IOC would like to have a high local content as practically possible because IOC wants to make money for its shareholders and local content must be cheaper than international local. So I think it’s also a driver for an IOC to go to local content but if you push that too much as a Government and you push it over the edge, then suddenly it will work against you. So it’s a very volatile subject to discuss,” he asserted.
Nevertheless, Elias said Suriname is fortunate to have the opportunity now to grow step-by-step in developing its local content and not have to do it simultaneously with the “big boom”.
He noted that Suriname has taken an approach whereby it discusses with IOCs to see how they plan to develop their own local content. But this, according to Elias, works because his country is not already in the “big boom” unlike Guyana, which commences oil production next month.
However, even as the US oil giant, ExxonMobil and its partners gear up for first oil in the Stabroek Block offshore Guyana, where 14 discoveries have been made thus far, concerns are mounting about the lack of the adequate infrastructure to manage the budding industry.
Guyana is still in the process of creating a Local Content Policy with a third draft released by the Department of Energy. There were several consultations held on the document; however, some private sector bodies felt that the policy is inadequate and further complained that their recommendations are being ignored by policymakers.
One such suggestion is to include penalties for companies who are found in breach of the policy. However, Director of the Department of Energy, Dr Mark Bynoe, had explained that penalties and sanctions are not in the policy but the legislation governing the budding oil and gas sector.
