Guyana's President Mohamed Irfaan Ali has signed into law a local content bill that last week passed a tumultuous session in the country’s national assembly.
The signing of the bill puts new rules in place ahead of government plans to offer several exploration blocks for competitive bidding by international oil companies in the second half of this year.
“This local content bill gives us the opportunity to win. It sets the framework for Guyanese to win and that is what we are interested in,” Ali stated upon signing the bill into law.
The new law prioritises Guyanese nationals and companies in the procurement of some goods and services.
It lays out 40 services that oil companies and their sub-contractors must procure from Guyanese players and nationals by the end of the year.
These include local content percentages ranging from 5% to engineering and machining to as much as 100% to immigration support services.
According to Ali, the law is not set in stone but it is the start of a dynamic journey for Guyana, adding the development of the oil and gas sector will bring changes to the country’s economy.
A few days earlier in a session in the national assembly, Natural Resources Minister Vickram Bharat said the bill would promote competitiveness and encourage the creation of related industries that would sustain the social and economic development of Guyana.
“We want to get it into law in a hurry because we want Guyanese landlords to be able to rent their accommodation, we want Guyanese welders to be able to get welding business, we want Guyanese accounting firms to get accounting business… so yes! We did it in a hurry,” Bharat said.
The approval of the bill occurred after protests from the opposition that led to some unruly scenes inside the national assembly.
Several opposition members disrupted the proceedings by stealing the speaker’s mace and demanding the bill to be sent to a special committee instead of being debated on the floor.
The Georgetown Chamber of Commerce & Industry qualified the behaviour of some members of the parliament as shocking that “can be best described as hooliganism”.
The legislation relaxed some of the requirements that a previous draft of the bill included but added provision for performance reports, government monitoring and non-compliance penalties.
Contractors and licensees set up in Guyana will have to submit a local content master plan that must include a plan for employment, procurement and capacity development.
Legislators also approved the creation of a sovereign wealth fund to oversee Guyana’s future earnings from oil production.
According to the bill, proceeds from oil and gas production could be used for development and essential projects that are directly related to ameliorating the effect of a major natural disaster.
New acreage, new terms
Expectations are running high in Guyana, which intends to sell exploration rights in new offshore blocks, thus resulting in a higher government take than seen on earlier production sharing contracts.
Past and present administrations in Guyana faced criticism over perceptions that US supermajor ExxonMobil was granted generous terms for the Stabroek block, home of giant discoveries totalling more than 10 billion barrels of oil equivalent in recoverable resources so far.
ExxonMobil is already producing close to 120,000 barrels per day of oil in Guyana from the giant Liza field with the Liza Destiny floating production, storage and offloading vessel.
A second unit, the Liza Unity FPSO, is expected to start output on Stabroek within the next few weeks, with several more floaters in the development or engineering phases.