Raphael John-Lall

Con­sul­tants in the en­er­gy sec­tor be­lieve that pol­i­cy­mak­ers at the Gov­ern­ment lev­el must do more to en­sure that there is more lo­cal con­tent in the en­er­gy sec­tor that will lead to job cre­ation and more busi­ness ac­tiv­i­ty.

Lo­cal con­trac­tors in the en­er­gy sec­tor pro­vide a wide ar­ray of ser­vices such as drilling wells, ce­ment­ing wells, sup­ply­ing sup­ply ves­sels that go off­shore and pro­vid­ing labour.

En­er­gy con­sul­tant Gre­go­ry McGuire told the Busi­ness Guardian that lo­cal con­tent in the en­er­gy sec­tor re­quires more at­ten­tion from all stake­hold­ers.

“My un­der­stand­ing is that cur­rent­ly many of the con­tracts that are be­ing award­ed in the sec­tor, are bun­dled, mak­ing it dif­fi­cult for lo­cal sup­pli­ers to qual­i­fy for these op­por­tu­ni­ties. The prac­tice of bundling of con­tracts works against the spir­it of lo­cal con­tent, how­ev­er, multi­na­tion­als con­tin­u­al­ly en­gage in this ac­tion.”

He gave the ex­am­ple of fabi­ca­tion of plat­forms as an area where there is lo­cal ex­per­tise.

“Fab­ri­ca­tion of plat­forms is a prime ex­am­ple of a com­pe­tence that is avail­able lo­cal­ly and has been suc­cess­ful­ly tried mul­ti­ple time. How­ev­er, de­spite the ca­pa­bil­i­ty and ca­pac­i­ty be­ing avail­able lo­cal­ly, multi­na­tion­als are be­ing grant­ed the ap­proval for plat­form fab­ri­ca­tion to be ex­e­cut­ed abroad. When this is done, not on­ly are T&T’s peo­ple and busi­ness­es not ben­e­fit­ting from jobs, con­tracts and an in­jec­tion of mon­ey in the lo­cal econ­o­my, through lo­cal spend­ing, but the plat­forms that are built abroad ben­e­fit the econ­o­my of an­oth­er coun­try (Mex­i­co or Gulf of Mex­i­co), their lo­cal peo­ple are em­ployed and ser­vice com­pa­nies are en­gaged. Af­ter the com­ple­tion of the plat­form abroad, the Gov­ern­ment of T&T is re­quired through cost re­cov­ery, to re­im­burse the multi­na­tion­al com­pa­ny for the per­cent­age of spend to fab­ri­cate the plat­form.”

Dur­ing the post-bud­get de­bate at the end of Sep­tem­ber, Op­po­si­tion Leader Kam­la Per­sad-Bisses­sar crit­i­cised the present Gov­ern­ment’s en­er­gy poli­cies and spoke about the im­por­tance of sup­port­ing lo­cal ser­vices com­pa­nies, es­pe­cial­ly small­er ones in the en­er­gy sec­tor.

“The Gov­ern­ment and multi­na­tion­als have al­so for­got­ten about lo­cal con­tent. The multi­na­tion­als are back to their old ways of hir­ing for­eign ser­vice com­pa­nies ahead of those owned by cit­i­zens of T&T,” she said.

McGuire al­so said lo­cal ser­vice providers that have the com­pe­ten­cies to per­form tasks, and com­pet­i­tive­ly par­tic­i­pate in bid­ding process­es, are be­ing de­nied the op­por­tu­ni­ties even though they suc­cess­ful­ly qual­i­fy for the sim­i­lar ser­vices re­gion­al­ly and glob­al­ly.

“Lo­cal ser­vices com­pa­nies are not al­ways privy to op­por­tu­ni­ties in ad­vance as the for­eign ser­vice com­pa­nies are, thus re­sult­ing in lo­cal ser­vices com­pa­nies be­ing un­pre­pared to bid suc­cess­ful­ly, due to the short no­ti­fi­ca­tions.”

McGuire of­fered so­lu­tions and these in­clude:

* T&T needs a high-lev­el lo­cal con­tent cham­pi­on;

* The Gov­ern­ment, through the Min­istry of En­er­gy should be more strate­gic and in­ves­ti­gate op­por­tu­ni­ties with­in each project ear­ly, make the in­for­ma­tion avail­able with­in the sec­tor; and cre­ate ini­tia­tives to as­sist lo­cal ser­vice providers to pre­pare to bid suc­cess­ful­ly for these ac­tiv­i­ties/projects;

* In or­der for lo­cal com­pa­nies to be fair­ly treat­ed, their ca­pa­bil­i­ties need to be clear­ly doc­u­ment­ed and this data­base should be ref­er­enced be­fore any con­tract is award­ed;

* Ad­di­tion­al­ly, multi­na­tion­al com­pa­nies need to be trans­par­ent in their pro­cure­ment of goods and ser­vices com­mu­ni­cat­ing the com­pe­ten­cies re­quired for each ser­vice, and mea­sures that are re­quired to close those gaps; and

* The Per­ma­nent Lo­cal Con­tent Com­mit­tee (PLCC) needs to be more vis­i­ble/ in­volved in the en­er­gy sec­tor’s af­fairs.

Use lo­cal labour

In an in­ter­veiw with the Busi­ness Guardian, con­sul­tant Kevin Ram­nar­ine ex­pressed his dis­sat­is­fac­tion say­ing that once the lo­cal skills and com­pe­ten­cies ex­ist in T&T, there should be no need for multi­na­tion­als to use for­eign man­pow­er or oth­er tech­ni­cal re­sources but in­stead they should use lo­cal con­tent.

“I’m not hap­py at all about what I’m hear­ing from the lo­cal en­er­gy ser­vice com­pa­nies. It seems they have no one to speak for them on mat­ters of lo­cal con­tent. A part of the prob­lem is the si­lence on these mat­ters. It seems we are in re­treat when it comes to lo­cal con­tent. We have a lo­cal con­tent pol­i­cy that was pub­lished in 2004. At that time, it was a strong state­ment from the Gov­ern­ment and I think it had some ef­fect. Poli­cies how­ev­er don’t have the en­force­abil­i­ty of a law.”

Ram­nar­ine point­ed to Guyana as an ex­am­ple.

“In Guyana they passed a law for lo­cal con­tent in 2021. It has pros and cons but I think it has caused many in T&T to sit up and ask ques­tions about the ad­e­qua­cy of our own arrange­ments. Guyana was pre­pared to draw a line in the sand much like Nor­way did in the ear­ly 1970’s. In T&T, the lack of pres­sure on lo­cal con­tent cou­pled with di­min­ished ac­tiv­i­ty has led to the dec­i­ma­tion of the en­er­gy ser­vices sec­tor.”

He made ref­er­ence to Cen­tral Sta­tis­ti­cal Of­fice (CSO) da­ta which shows a de­cline in em­ploy­ment in the en­er­gy sec­tor.

“In the third quar­ter of 2015, there were 22,500 per­sons with jobs in the en­er­gy sec­tor. As of the sec­ond quar­ter of 2023, that fig­ure is 8,200. Where is the con­ver­sa­tion about this? I don’t hear it com­ing from the Hy­att Ho­tel Ball­room. What caused such a dras­tic col­lapse?”

Fi­nal­ly, he urged lo­cal com­pa­nies in the en­er­gy sec­tor to con­tin­ue to raise their stan­dards up to in­ter­na­tion­al best prac­tice.

“The oth­er part of the equa­tion is we ought not to push lo­cal con­tent for lo­cal con­tent sake. Lo­cal com­pa­nies must be com­pet­i­tive and meet best prac­tice in Health, Safe­ty and En­vi­ron­ment (HSE) stan­dards. The fact, how­ev­er, is many of them tick these box­es and are still mys­te­ri­ous­ly ex­clud­ed. The ques­tion of leg­is­lat­ing lo­cal con­tent in the en­er­gy sec­tor is bound to gen­er­ate de­bate. Some see it as a bar­ri­er to in­vest­ment and some see it as a nec­es­sary path to greater T&T par­tic­i­pa­tion in the en­er­gy in­dus­try. If it hap­pens (post 2025), it has to be a bal­anced law.”

Gov­ern­ment pol­i­cy

The web­site, the “En­er­gy Year” which pub­lish­es glob­al oil and gas news, pub­lished an in­ter­view done with En­er­gy Min­is­ter Stu­art Young dat­ed June 15, 2023 in which he ac­knowl­edged the need for the in­put of more in­de­pen­dent op­er­a­tors in projects in the lo­cal en­er­gy in­dus­try.

“In­de­pen­dent op­er­a­tors have a vi­tal­ly im­por­tant role to play in T&T. The Min­istry of En­er­gy has man­dat­ed that Her­itage open up its acreage. There are com­pa­nies that are in­ter­est­ed in en­gag­ing in far­mouts and lease outs with Her­itage. These small­er com­pa­nies are nim­ble and if they have the cap­i­tal avail­able, and are will­ing to drill and to pro­duce, then we will ful­ly en­cour­age the ac­tiv­i­ty. They are crit­i­cal not on­ly to main­tain­ing oil pro­duc­tion, but to in­creas­ing it,” Young said.