Chairman and Chief Executive Officer of Nestoil Group, Dr, Ernest Azudialu-Obiejesi, has urged the Guyanese government to learn from Nigeria’s past mistakes in the oil and gas sector and strongly enforce its local content law.
His comments come as Guyana intensifies its efforts to ensure that the benefits of its burgeoning oil industry truly reach its citizens.
“Nigeria made some mistakes. Yes, we went through our own growth period. And then some of the things we got right, some of the things we got wrong. But one thing that is very important is making sure that the local content law is not only written but enforced,” Azudialu-Obiejesi said during an appearance on the Guyana Energy Perspectives Podcast, published June 16, 2024.
Azudialu-Obiejesi warned that without stringent enforcement, the billions of dollars expected to flow through Guyana’s oil and gas industry might not significantly improve the lives of the local population.
Nestoil Group, a major player in Nigeria’s oil and gas sector since 1991, has witnessed firsthand the consequences of delayed and poorly enforced local content regulations.
Azudialu-Obiejesi pointed out that Nigeria’s local content law came into effect only after many years of production, which limited its initial impact. According to him, Guyana, in contrast, has proactively established its local content framework from the outset of its oil exploration activities.
Azudialu-Obiejesi also highlighted the importance of continuous improvement and periodic review of these laws to ensure they are effective and practical.
“The Guyanese government started from day one, so they need to review and improve on the law all the time. Making sure that the enforcement of that law and the enhancement of the law is something that they should review periodically to ensure that all the conditions within the laws are met practically on the ground,” Azudialu-Obiejesi said.
Azudialu-Obiejesi reaffirmed that as Guyana navigates its path to becoming a significant oil producer, learning from Nigeria’s experience and maintaining robust oversight can help secure the intended benefits for its people.
“Once you do that and enforce it, you see the transfer of technology and the transfer of these services will start within the country,” he said.
This advice aligns with recent statements from Guyanese Vice President Bharrat Jagdeo, who has announced stronger penalties for companies engaging in ‘fronting’ to circumvent the Local Content Act (LCA). This practice, where foreign entities use local companies merely as facades to meet local content requirements, undermines the intent of the law.
He highlighted that both foreign companies and complicit local entities would face consequences for circumventing the law. The Ministry of Natural Resources has also been intensifying efforts to track unethical practices, with the Local Content Secretariat and the GRA working together to identify and penalize offenders.