Trinidad’s opportunity with Exxon to get local content right

JAVED RAZACK

IN August 2025, the country received one of the best pieces of news that the energy sector could have hoped for.

ExxonMobil, the world's largest multinational oil company, signed a production sharing contract (PSC) for 100 per cent of the Ultra Deep 1 block (UD1) off Trinidad’s east coast. UD1 is an amalgamation of seven blocks that had not been nominated by other companies in the country’s most recent deepwater bid round.

A new government was able to sign a contract of this magnitude just three months after taking office – they certainly deserve commendations for that.

Exxon plans to acquire 3D seismic data during 2026 and drill at least one well by 2028. In the world of exploration, this is extremely fast and would be record setting for deepwater in Trinidad and Tobago. Exxon can take advantage of their massive footprint in the region to mobilize very quickly.

The prime minister and minister of energy committed very early on in their term, to ensure there is bigger participation of local companies in the energy sector, allowing more of our people and contractors to grow into world-class companies. Energy services exports to the rest of the world are a low hanging fruit to fast-track diversification and bring back more US dollars to TT.

The single biggest thing holding back local content development in TT is that the Permanent Local Content Committee’s (PLCC) is severely underpowered and under-resourced. This government has a once in a lifetime chance to address this – this is discussed below. No legislation even needs to be passed to fix this.

If Exxon is successful and discovers oil fields even close to the scale found in Guyana, it will be transformational for TT, who’s hydrocarbon sector, especially oil, has dwindled to below 50,000 barrels per day. Exxon could practically produce first oil within five years of discovery.

Background on the block

The blocks comprising UD1 have never been drilled and only have a few sparse 2D seismic lines across parts of it. This is the last true totally greenfield exploration acreage left in TT.

UD1 is 7765 sq km. For comparison, Trinidad is less than 5,000 sq km and Exxon’s Stabroek block in Guyana is a whopping 26,800 sq km.

UD1 forms a triangular zone at the easternmost edge of TT’s maritime boundary, with Barbados’ acreage to the north and east, and Guyana’s waters to the south. The block does not touch Venezuela’s current maritime boundary.

However, Venezuela has disputed its border with Guyana in recent years and has “claimed” the entire Essequibo region and the waters extending from it. Therefore, in Venezuela’s claim, to the south of UD1 would be their territory. Exxon’s block is therefore in a very interesting geopolitical position as discoveries could potentially cross into Trinidad, Guyana and Barbados, not counting this dispute between Guyana and Venezuela.

Exxon signed the block days before the US sent their first military vessels to Venezuela’s doorstep. Tensions between the countries and within the Caribbean are now at an all-time high. A truly interesting time for US based Exxon to begin exploration in TT.

Why the interest in Trinidad?

Exxon’s largest developments globally over the last 10 years have been in Guyana. They are currently producing over 900,000 barrels of oil per day – this was zero in 2019. In November, Guyana became the world’s highest oil producer per capita.

Exxon has had unprecedented deepwater success in the Stabroek Block, with four FPSOs already producing oil, and several more in the pipeline. To the south, Suriname has sanctioned its first offshore development with Total Energies (first oil expected in 2028) and in November, Petronas announced commerciality of its Sloanea gas field, which will be Suriname’s first offshore gas development.

Guyana, Suriname and Trinidad, now form a bloc of massive oil and gas investment dollars from the largest firms in the world – Exxon, Total, Chevron, BP, Shell, Qatar Petroleum, Petronas, Apache, CNOOC and more. Exxon has said it hopes to replicate Guyana’s success in Trinidad and is looking for oil not gas. Their Guyana basin’s geological model has been extended into Trinidad’s ultra deep, which is why they have taken the UD1 block. Please note that Trinidad’s geology is far, far more complex than Guyana (an article for another day) and exploration chance of success is generally around 10 per cent for virgin acreage.

Exxon, Guyana and local content

As Guyana’s oil story has developed, their government’s stance on local content has been a hot topic, receiving serious praise and harsh criticisms. Legislation has been passed that requires 40-plus services (like customs brokerage, catering and pest control to name a few) to only be awarded to companies that have at least 51 per cent local ownership. On top of that, local employees must comprise at least 75 per cent of staff and management of the companies must comprise at least 50 per cent locals. Companies in these categories must have a local content certificate to operate.

All companies supporting oil and gas must register with the Local Content Secretariat and must submit documentation showing ownership structure and shareholding, Guyanese staffing, local spending and must demonstrate a local office and operational presence.

There are tons of quarterly and annual reporting requirements, audits and intense scrutiny along with major fines for breaches.

Most impressively, for a new entrant into oil and gas, Guyana’s government has demonstrated significant capacity to enforce the local content laws thus far.

Does Trinidad have local content rules?

Industry experts have long criticised TT for never passing local content laws, and also for the lax enforcement of the local content policy. Exxon’s entry into TT represents the first real opportunity in a long time to set the right tone. This comes as Exxon themselves have gone through many hurdles in Guyana along these lines and will be very open to TT’s requirements, which are not nearly as stringent, and are yet extremely unenforced.

So what exists in TT for local content in oil and gas?

1. Local Content & Local Participation Policy & Framework (2004) – published by the Ministry of Energy (MEEI)

2. The local content chapter of production sharing contracts (between the operator like Exxon and the government)

3. Local Industry Development and Local Content Rules (2022) – for state procurement, published by the Office of Procurement Regulation. Refers heavily to number one. Numbers one and three are of course public, and while we don’t have access to the actual PSCs, the MEEI has put out model PSCs (latest was in 2023) that have a standard local content chapter. Industry insiders have confirmed the wording is the same in all the new PSCs. Since Exxon is not a state entity, number three above will not apply. Therefore, the policy and the PSC are what needs to be considered when it comes to local content.

Who enforces these?

Similar to the Local Content Secretariat in Guyana, TT has the PLCC – the Permanent Local Content Committee that sits within the Ministry of Energy.

Their mandate is to enforce the implementation of the Local Content and Local Participation Policy. It is however, unfortunate that the PLCC has no real teeth, no real power, almost no staff and has not been supported nearly enough by the MEEI or the broader government in implementation of the Policy. This has been one of the real failings of Local Content development in T&T.

The PSC local content clauses ought to be monitored and enforced by a combination of the MEEI and the PLCC. In practice, this rarely occurs.

The good news is that no new legislation needs to be passed. The policy and PSC terms are good, but enforcement is extremely weak. This is why Exxon’s entry is a perfect opportunity to finally get this right.

What do the policy and PSC say about local content?

The word “local” appears 88 times in the model PSC. The following is the entire chapter on local content directly from the Model PSC of 2023 (Exxon’s PSC should be identical to this):

Article 39 of the Model Production Sharing Contract (2023) – Local Content

39.1 Contractor shall comply with the government’s local content legislation and policies that are in effect and which may be amended from time to time.

39.2 Contractor shall maximise to the satisfaction of the Minister the level of usage of local goods and local services, businesses, financing and the employment of TT nationals.

39.3 Contractor shall ensure that sub-contracts are sized, as far as it is economically feasible and practical to match the capability (time, finance and manpower) of local contractors or local suppliers and shall manage the risk to allow their participation.

39.4 Contractor shall provide to the minister together with the annual work programme and budgets required under Articles 14 and 15 a list of all projects to be undertaken as well as all goods and services that are required for the conduct of petroleum operations. The minister and contractor shall agree on a list of those projects and goods and services which shall be published in at least two local newspapers and on the ministry’s website.

39.5 All tenders are to be advertised, evaluated and awarded in TT. Contractor shall apply to the minister for prior approval where the circumstances warrant that any part of the tender process be conducted outside of TT.

39.6 Contractor shall give equal treatment to local contractors or local suppliers by ensuring access to all tender invitations and by including high weighting on local value added in the tender evaluation criteria.

39.7 Contractor shall give assurance to local contractors or local suppliers in respect of prompt payment for goods and services actually provided to Contractor and its subcontractors both foreign and local.

39.8 Contractor shall ensure the development of people by imparting to nationals technology and business expertise in all areas of energy sector activity including but not limited to: (i) fabrication; (ii) information technology support, including seismic data acquisition, processing and interpretation support; (iii) operations and maintenance support; (iv) maritime services; (v) business support services, including accounting, human consulting, resource marketing negotiations; (vi) financing; and (vii) trading.

39.9 Contractor shall ensure that nationals are selected and trained consistent with contractor’s performance standards in relation to activities referred at Article 39.8.

39.10 In addition to the requirements in Article 39.8 contractor shall ensure that the development of people in key areas allows nationals to take more value-added, analytical and decision-making roles in areas of:

(a) a technical or professional nature including general management, design engineering, project management, seismic data processing, human resource development, legal; and

(b) business strategic skills including leadership, business development, executive management, commercial, analytical, negotiating, strategy development and trading know-how and acumen.

39.11 In accordance with its obligations under Article 10.4, contractor shall maintain records to facilitate the determination of the local content of expenditure incurred in respect of petroleum operations. These records shall include supporting documentation certifying the cost of local goods, labour and local services used and shall be subject to audit by the minister.

39.12 Pursuant to Article 11 of Annex “C” contractor shall prepare and submit reports to the minister in accordance with the specified timeframe.

The policy was launched in 2004 in collaboration with many stakeholders like the OWTU, Bankers Association, TTMA, Petrotrin, TT Chamber of Industry and Commerce and the MEEI.

Above, we have the PSC Local Content chapter. Now what key items does the policy speak to?

• "Local" is defined based on having local ownership, control and decision-making ability.

• The PLCC is responsible for updating the Policy as needed.

• PLCC is responsible for developing specific sub-policies and strategies to improve technology transfer, local skills and business capability.

• PLCC is the body to ensure compliance with these policies.

• Local content should be maximized by giving preferential treatment to local suppliers (the policy is clear that operators like Exxon, BP and Shell are responsible for this and cannot defer this to their prime contractors).

• Employment – prioritising locals in specific fields including but not limited to general management, seismic processing, HR, business development, commercial, negotiating and project management.

• Services – prioritizing local companies for fabrication, maintenance, IT, Seismic processing and data management, marine and logistics services, accounting, HR, financing.

• PLCC to create and maintain databases of local suppliers, projects and operational work programs, people development programmes, progress reports of each operator on local content compliance and so on.

Recommendations for government to focus on:

1. Move quick to strengthen and support the PLCC to achieve its mandate. This includes high level staff and making it clear to the industry that the PLCC is the authority on local content.

2. Update the policy if needed.

3. Enforce the production sharing contract terms on local content through MEEI and PLCC.

Recommendations for Exxon to focus on in the early stages of exploration:

1. Ensure that suppliers (directly from Exxon as well as through prime contractors) are local as far as possible, especially in the fields of fabrication, maintenance, IT, seismic processing and data management, marine and logistics services, accounting, HR, financing.

2. Ensure that all tenders are advertised, evaluated and awarded in TT.

3. Ensure local contractors have access to all tender invitations and that high weighting on local value added is in the tender evaluation criteria.

It needs to be said, that even if enforcement remains weak, Exxon as the operator is aware of their contractual obligations on local content as well as the 2004 policy. The onus is also on them to abide by these and ensure that they respect the country they are operating in. We have seen them take this very seriously in Guyana and we are looking forward to the same in TT.

Simultaneously, the MEEI and by extension the government cannot allow a new potential oil-boom to occur with the weak systems currently in place to manage local content.

Javed Razack is a former president of the Geological Society of T. Follow GSTT on Facebook, Instagram, LinkedIn and check out https://thegstt.org/