-stresses good contract administration

Investment in education is key to ensuring that Guyana’s reaps the maximum benefits from its nascent petroleum industry and this would also boost other sectors of the economy and ensure all citizens benefit, a top Trinidad oil industry official has said.

“One of the key ways that the State can ensure that all its citizens benefit from the development of the country’s energy sector is by creating strategic linkages between the energy and non-energy sectors. In this regard, the link between the energy sector and education sector is critical. The global energy sector operates in a highly competitive international environment. As a result, the local Guyanese energy industry will have to achieve and maintain international performance standards,” Professor Andrew Jupiter, the Chairman of the Board of Directors of Trinidad and Tobago’s state oil company Petrotrin told a packed house at the Pegasus Hotel on Friday.

Scores of Guyanese turned out to hear a lecture by the University of the West Indies professor on ‘The importance of education in the development of the oil and gas sector – experiences and perspectives of Trinidad and Tobago.’ The lecture was hailed as timely as the country looks to exploit huge oil reserves discovered by American oil company ExxonMobil offshore last year and this year. Exploration activities are continuing.

Jupiter, who has been involved in the energy sector for 45 years, suggested a number of priorities in developing a guide for the development of the energy sector in Guyana. He said the main objective should be the maximisation of value from Guyana’s energy resources and to position Guyana as a player in the global energy market.

Other priority objectives include crafting a legislative framework that will encourage the expansion of the country’s energy sector in a manner that promotes significant local initiative; establishment of a regulatory framework that creates an attractive investment climate but also protects the sovereign rights of Guyana and its citizenry; creation of a greater level of private local participation along the energy value chain; increasing the level of people skills by developing appropriate strategies, building institutions, enterprise development and creating a cadre of energy leaders in Guyana; ensuring compliance with environmental standards along with health and safety good practices; and focus on partnering with communities through education, training and cooperatives.

The professor emphasised the importance of investing in education saying that to meet requirements of the global energy sector, the local energy industry has to achieve and maintain international performance standards.

The professor said that the experience in Trinidad has shown that these standards over the years invariably set a high bar for the quality of human resources employed in the sector at every level from those involved in clerical and administrative positions to craftsmen, engineering and other professionals. He traced the development of the Trinidad and Tobago energy sector and highlighted how it can provide Guyana with an idea of the possible issues, pitfalls and opportunities that the development of the country’s new-found petroleum resources may bring.

Apprenticeship

According to Jupiter, a possible first step to the development of the required human resources for the sector could be the establishment of energybased apprenticeship programmes which will aim at providing a continuous supply of craftsmen and technicians to support the needs of the emerging local industry. “The output of programmes this system should also seek to not only provide a foundation for the development of the Guyanese petroleum industry but also its expansion in the future to possible refining, petrochemical and gas-based industries,” he emphasised.

He pointed out that among other things, a Board of Industrial Training in Trinidad was critical for the development of the professionals needed.

“It is clear than the development of the energy sector in Guyana will provide the country with a large cadre of highly trained and experienced personnel with skills that are easily transferrable to other services,” he said.

The engineer added that as in the case in Trinidad, this makes the energy sector uniquely poised to play a catalytic role in providing expertise, safety and environmental standards and quality human resources for the development of the rest of the Guyanese economy.

The investment in education should start at the contractual arrangements, Jupiter, who has negotiated oil contracts on behalf of Trinidad, said. In this regard, he highlighted a contract entered into by Trinidad and an oil company which provided for millions of US dollars for educational development and training opportunities. He also emphasised the importance of good contract administration to ensure that the benefits from such arrangements are reaped. “Contract administration should be even better or equal to the negotiators,” he said while noting that

having a resource like oil and gas gives enormous leverage during negotiations.

“You must know what is in your contract and work your contract for the benefit of the people of Guyana,” Jupiter stressed.

He added that education costs money but so does ignorance. He highlighted how Trinidad invested in education from the proceeds of its oil and gas. He said that based on the estimate of potential revenues, it is possible that Guyana could see an increase in spending on education increasing between 20% to 80% above the current allocation of $40 billion. “When you find petroleum, you have more money to spend on education,” he said.

Meantime, the professor identified some strategic issues for the sector here including the development of human capital. He said education will play a significant role in filling the human capital gap in Guyana’s energy sector. “Developing Guyana’s human capital is one way of converting its below the ground, non-renewable petroleum resources into above the ground renewable human resources,” he said while adding that education is critical to not only the sustainable development of Guyana’s energy sector but its overall economy.

Another issue identified by Jupiter is strengthening institutional capacity. “Strengthening institutional capacity is critical to ensuring that Guyana is able to effectively plan for the sector, monitoring of the plans and make timely…recommendations for appropriate alterations in strategy” he said while adding that “You don’t always get it right the first time…”

He said in this regard, Guyana may consider establishing committees responsible for making appropriate alterations and noted that in Trinidad, there is a Standing Committee of Energy made up of ministers and technocrats. He added that ideally, it should be funded by both the public and private sector energy companies and the funds will be used to commission studies, fund research and undertake public education consistent with its mandate.

He said that from the first molecule of oil and gas extracted, the government should immediately receive a portion and there should be a limit on cost recovery by oil companies. He stressed that the resources belong to the country and strengthening of institutional capacity is important.

He said that another strategic issue is enterprise development. “Enterprise development is a key component if local Guyanese businesses are to maximize value from the industry,” the professor stressed noting that this involves the ability to attract, develop and retain strategic business skills to ensure that businesses can grow, change and succeed. He said that it also involves worldclass business tools, processes and technology and competitive financing options.

Jupiter said another strategic issue is developing the necessary legislative and institutional framework. “In order to develop the Guyanese energy sector, it is critical that an enabling environment must be created to attract foreign direct investment,” he said while noting that Trinidad has about 15 pieces of legislation.

The professor highlighted the importance of local content in the industry. He said it is important to move from the area of discussing wanting a policy on local content to the area of legislating local content. He said Trinidad could have done better in this regard while noting that all investment can evaporate if one fails to plan for Guyana.