Maximising local content

ENERGY CHAMBER

 

Local content may be applied to many industries as evidenced in the Australian auto industry in the 1960s-1970s, the media industry and the wind power industry in China. In the media industry, local content relates to the percentage of programming not imported. It also has relevance in the construction, manufacturing and financial sectors. As it relates to the energy sector, local content is defined as “the added value brought to a host nation (national, regional and local areas in that country, including communities) through the activities of the oil and gas industry (Global Reporting Initiative 2011). In Brazil, local content is defined as the share of national industrial participation in supplying goods and services for a specific project. 

 

 

The intention of the T&T’s Local Content and Local Participation Framework is to “maximise the participation of its national people, enterprises, technology and capital through the development of locally-owned businesses, local financing and human capabilities in the conduct of all activities connected with the energy sector, along its entire value chain, within and outside T&T.” The framework defines local content in terms of the “the level of ownership, control and financing by citizens of T&T…” Most oil, gas and petrochemical companies operating in T&T have a stated strategic objective of maximising local content in their operations. In the upstream sector, many companies have legal obligations to report on local content to the Ministry of Energy and Energy Affairs, especially those holding newer production sharing contracts. However, companies face a difficulty in monitoring and evaluating the level and impact of local content.

 

 

One of the problems involved in monitoring and evaluation is the lack of a firm definition of what is a local company and what methodology should be utilised to determine if a particular supplier is “local” or not.  Over the past few years, the Energy Chamber has had numerous discussions on this issue with many stakeholders in the industry, in particular the Ministry of Energy and Energy Affairs. Despite all the talk, there has been not consensus or any specific definition of what exactly constitutes a local company.  The T&T energy sector has always been open to international competition and there are a large number of international service companies active in the local market. T&T energy service companies have had to ensure they are internationally competitive in order to survive and grow. The Energy Chamber, in realising this, has embarked on several initiatives to accomplish this.

 

 

Major areas of action

• Addressing concerns over HSE pre-qualification: STOW is a certification scheme for contractor safety management in the energy sector of T&T. 

Many T&T-owned and -operated service companies and contractors believe they are unfairly excluded from bidding for work on dubious grounds relating to their HSE management systems. 

A consistent uniform transparent pre-qualification system, administered through independent assessors, will help these companies improve their HSE management systems and get on more bid lists for contracts in the energy sector. It will also improve the general HSE performance across the industry, reduce injury and save lives. 

 

 

• Helping implement competency assurance systems: Operating companies began demanding service companies prove they had a competent workforce. The Energy Chamber embarked on a T&T competency assurance system for the energy sector. We have been working closely with the National Training Agency and the Centre for Development of Enterprise to ensure the Energy Industry Competency Development Initiative (EICDI) is a success.

 

 

• Energy Chamber’s Learning Centre: The Energy Chamber has established a new modern facility designed to offer training and assessments to the T&T energy sector, with an emphasis on health, safety and the environment. The Learning Centre provides high-quality, competitively priced training and assessment units. It is built on the Houston Area Safety Council infrastructure, ensuring extremely robust data management systems and access to decades of best practice. It is owned by the energy industry and managed for the industry’s benefit.

 

 

• Database of service companies and contractors including standard measurement of Local Content score. 

The Energy Chamber has taken a decision to put together and advertise a database, including a methodology for measuring if a company is local or not. This is a free service and all contractors and service companies can access the database through the Energy Chamber’s Web site at: www.energy.tt.  

 

• Developing fair contracting standards: There has been a history of international EPC contracts using unfair business practices and unbalanced contracts, to the determent of local companies, especially in the plant construction sector. 

The Energy Chamber has been exploring mechanisms to create guidelines for operating companies to follow when they engage EPC contractors. Energy Chamber is still in the design phase for this initiative, but we will be pursuing possible mechanisms over the next few months. The Energy Chamber also has an Energy Services Committee comprised of members of the chamber with its main goal being to guide and promote the development of the energy services sector in T&T and in international markets. 

 

 

Major activities of the Energy Chamber’s Energy Services Committee

• To ensure that local content policies are implemented in all sectors of the energy industry (upstream, midstream and downstream). The policies are to be drawn from the document prepared by the Energy Chamber entitled, Playing to our Strengths, and the document prepared by the National Energy Corporation.

• Monitor future projects and share information about potential opportunities for local companies. 

• Develop a methodology for measuring what is a local company. 

• Ensure that at least 150 companies fill out the local content questionnaire.

• Strengthen and update existing database of local companies and their scores.

• Identify export opportunities for local companies in regional/extra-regional markets. 

• Monitor initiatives of the Energy Chamber that relate to the energy services sector. These initiatives include STOW, EICDI and the Energy Chamber Learning Centre.

• Encourage co-operation between local companies and facilitate investment into new equipment, training, etc. 

• Lobby the Government for changes to the Customs and Excise legislation and practices that hamper the movement of equipment in and out of T&T. 

• Educate member companies and the general public about the energy services sector, including the local capacity and the potential for development.

 

For further information, please contact Priya Marajh at: [email protected]