Local businesses fear being sidelined in oil sector

Jun 03, 2017 News, http://www.kaieteurnewsonline....lined-in-oil-sector/

A number of Guyanese companies are appealing to Government to pull out all stops to ensure they get a piece of the oil pie.

They are registering concerns about not being able to provide goods and services to the emerging oil and gas sector due to the growing presence of foreign companies with experience in the sector, particularly from Trinidad and Tobago and the United States.

Recently, there was a wave of companies from T&T and the United States seeking to mop up contracts from ExxonMobil and the Government of Guyana as it relates to the provision of goods and services in the oil and gas sector.

In a few weeks time, the Trinidad and Tobago Energy Chamber is slated to bring to Guyana a large business delegation to explore more business opportunities in the oil and gas sector given the poor state of T&T economy. The attention to Guyana is due to its declining oil and gas sector in that Twin Island Republic.

The T&T companies would be hoping to rescue their struggling businesses and create opportunities, which have been facing a downturn from low oil prices.

A number of local business leaders have told Kaieteur News that if contracts for the supply of goods and services are only awarded to the foreign companies, then there will be no opportunities for local businesses to develop the experience, reputation and capacity to service the new oil and gas sector.

ExxonMobil, a US-owned company headquartered in Texas, is gearing for a 2020 start in production.

There is a host of services – goods supply and other logistical ones – up for grabs when production starts.

These include the supply of fuel, food and water, hotel accommodation, storage facilities for supplies, waste management, Customs services and even helicopter services.

The demand for these services and goods is worth billions of dollars and is a considered critical spinoff from oil production activities.

Recently, Minister of Natural Resources, Raphael Trotman, indicated that the government intends to ensure that policies and support are in place to provide for local content in the oil and gas sector.

Guyana is prepared to accept a 50-50 share of the profits with ExxonMobil. But the company and its partners will have to recover costs before that 50-50 equation kicks in.

Guyana has received an application from ExxonMobil for a production licence. Government is finalising details and is expected to speak more in a few weeks on what exactly Guyana is getting when production starts.

A number of Guyanese companies are already investing in capacity and specialized resources for the oil and gas sector. However, they remain fearful that businesses from developed oil and gas economies such as T&T, Suriname, and the US can displace them and deny opportunities in the sector given their inherent experience and advanced capabilities within that sector.

Companies are urging the government as well as oil and gas operators to look at unique ways in which local content and capacity can be encouraged.

Guyana has explored the possibilities of an oil refinery but a recent study by an independent consultant did not find favor.

However, interest has remained high. The refining of the pumped oil from the wells to be located about 100 miles from the shores of Guyana is still to be announced with Petrotrin in Trinidad and another refinery in Suriname expressing interest.

Guyana has been exploring also, the construction, in Crab Island, East Bank Berbice, of an onshore facility that will offer a range of services. A US$500M figure has been touted for that project.

However, since being announced a few months ago, there have been no updates.

With almost two billion barrels of high quality oil said to be in the area and with more wells to be drilled, close attention is being paid to the agreement with ExxonMobil.

Guyana has started examining a number of mechanisms to cater for the proceeds, including a Sovereign Wealth Fund and legislations.

A number of local ports, including John Fernandes, are said to be benefitting from the current exploration activities, but come 2020, the demand for services will be taken to another level.

Topics