Optimizing Local Content through an Early Entry Strategy and Applications of Lessons Learned: The Guyana Case Study – Centre for Local Business Development Centre

Abstract

Local content optimization is one of ExxonMobil's global best practices. Once oil was discovered in Guyana, ExxonMobil Guyana made the unprecedented decision of initiating local supplier development before Final Investment Decision (FID) and contractually mandated prime contractors to work to support a robust local content regime. Initial steps taken included: Establishing local content requirements in the prime contractor contracts and hiring DAI Global (DAI) to establish the Centre for Local Business Development to provide a mechanism to engage local businesses. Contracting DAI Global to analyze the Guyanese business environment, identify early opportunities for local content, develop fit-for-purpose development programs, and plan for long-term sustainability of the Centre. Modifying standard procurement practices to facilitate local supplier entry into the oil and gas market through supplier forums, unbundling and supplier mentoring activities. The Centre for Local Business Development (Centre) was conceptualized and announced months before FID. The Centre provides fit-for-purpose local supplier development programs based on the evolving needs of local businesses to enter the oil and gas supply chain. The Centre focuses on three key areas: supplier engagement and registration, general business support, and supplier development. Engagement and registration focuses on allowing businesses to garner the necessary information to make strategic investment decisions. General business support aims to build a pool of businesses compliant international standards. Supplier development utilizes mentoring programs to enable businesses to make the transition into the oil and gas supply chain and potentially win tenders. Optimizing local content in countries where industrial development is limited requires understanding the local supply chain and implementation of fit for purpose interventions as early as possible; testing initiatives; and adapting to the needs of local suppliers, operator and prime contractors. This paper outlines how early intervention in local capacity building enables local companies in a developing market (inadequate business infrastructure and systems) to successfully transition into the oil and gas value chain.