Guyana pushing ExxonMobil for cheap natural gas-generated electricity, higher pay for Guyanese

Last Updated on Sunday, 16 August 2020, 17:49 by Denis Chabrol

The Guyana government plans to open negotiations with United States (US) oil giant ExxonMobil to purchase natural gas to push industrialisation and provide cheap electricity to the nation as well as entrench local content requirements to ensure Guyanese are not paid lower salaries than in other countries, Vice President Bharrat Jagdeo told a news conference on Friday.

Claiming that the David Granger-led administration had put “road blocks” in ExxonMobil’s way to sell natural gas to Guyana by failing to respond, he said government was examining a number of studies and would be seeking guidance from the “best technical minds” in an effort to get the project off the ground urgently. “We want this project on the road as early as possible and in that engagement we will have to get the gas at a cost that is very different than in the contract; we are signaling this,” he said.

He declined to say what would be a good price for the natural gas. Mr Jagdeo explained that the current price within the current contract is not feasible. He said, “We are signalling this. So, now the contract locks in a price for the gas and that’s at least for the first, 300-400 megawatts of power, because we need the electricity to industrialise this country and generate more jobs, and fulfill the promise to cut their [Guyanese] electricity bill significantly by half of what they are paying now.”

Other factors, he identified, that are crucial to the decision include the amount of gas that is available, whether the facility would be owned by a public-private partnership, build, own and operate or totally government-owned. “That decision has to be made but we want to get this done as swiftly as possible and ExxonMobil , I think, is eager to go along with this project, too, because from what I gather they have been waiting for quite a while for the government to show major interest in moving this forward,” he said.

Mr. Jagdeo said ExxonMobil has already been told that it could not hide behind the excuse that its sub-contractors are setting different rates of pay and tried to ensure that as many Guyanese are employed.

“A lot of their work if farmed out to sub-contractors who operate here in Guyana, who having been paying our people basically wages that are discriminatory; not comparable wage for comparable skill and that is what we insist on that they must be paid fairly and that the sub-contractors who have been bringing in people have to observe the strict local content legislation when it comes on board,” he said.

ExxonMobil Guyana said Wednesday more than 2,000 Guyanese are supporting its operations here which represents 55 percent of the total workforce. The company said its direct workforce grew to 155, more than 50 percent of which are Guyanese who received more than 100,000 hours of training as of the first half of 2020. And approximately 80 percent was in the areas of professional/technical and craft/trade training. The company also said more than 50 Guyanese have trained internationally.

Under then Natural Resources Minister Raphael Trotman, ExxonMobil had agreed to hike its contribution to education and training to US$300,000 annually but Mr Jagdeo described that as “paltry” and his government would be asking for more funds.

“We made it clear in meetings with ExxonMobil that we want them to do well here to make money but Guyanese must share this prosperity. That is not sustainable otherwise and we will insist that this must happen so that Guyanese must share the prosperity and that if they are doing well, our people must do well too in terms of opportunities and employment etc. That will be the guiding principle and philosophy in all of our engagements with ExxonMobil and subsequently once we start.”

Mr Jagdeo said the new government will re-engage Trinidadian oil consultant Mr Anthony Paul to develop a sound local content policy that will be crafted into a draft legislation. This legislation will make it mandatory for the companies to comply with the local content. The government plans to also meet with Guyanese countrywide through a series of meetings to get their input on local content for the sector.

The Guyana government wants to ensure that the contract provides sufficient safeguards for environmental impacts by the oil and gas industry. He added that the People’s Progressive Party (PPP) administration does not want flaring.