ExxonMobil open to audit of US$460M pre-contract costs

Jun 04, 2018 ExxonMobil, News

…Says Govt. has the right to audit every aspect of its operations

By Kiana Wilburg

ExxonMobil’s Head of Public and Government Affairs, Kimberly Brasington says that the oil giant is open to auditing of its US$460M pre-contract costs.
In fact, Brasington told Kaieteur News that government has the right and even the ability to audit every aspect of its operations.

ExxonMobil’s Head of Public and Government Affairs, Kimberly Brasington

Chartered Accountant, Chris Ram

“You ask about an audit? Bring it on! That is expected and customary in our industry. We welcome audits as it demonstrates transparency and helps build trust. The accusation that the US$460 million is not accounted for is inaccurate and uniformed. ExxonMobil and our partners will continue to be accountable to the Guyanese people. I continue to say it; we will only operate with the highest standards of ethics and accountability.”
The ExxonMobil official noted that there has been a lot of speculation and headlines about the US$460 million figure. “It’s a big number and a new industry. So I think it is good people are asking tough questions,” expressed Brasington.
The ExxonMobil official was responding to Chartered Accountant, Christopher Ram, who has contended for some time that the Government must undertake a special audit of the US$460M pre-contract costs which were incurred by ExxonMobil and its partners from 1999 to 2015.
The Government is yet to say if it will conduct a review on the figure.
EXTRA COSTS
Ram is also of the opinion that Guyana may very well incur more pre-contract costs. He reminded that the US$460M only accounts for 1999 to 2015. He noted, however, that the contract was revised and signed in late 2016. Ram said that there could be more costs from January 2016 to October 2016.
But Brasington did not agree with this conclusion. The ExxonMobil official said, “There is no additional pre-contract cost that is not included in the US$460M cost…There is nothing else…”
Brasington noted, however, that costs continue to be incurred from 2016 to now. She said this is towards the development of the Liza Phase One Project. She said that this will be added on top of the US$460M which are all cost recoverable.
BREAKDOWN
Brasington said that in some countries, the government and the contractor split the exploration costs upfront. In Guyana’s case, she said that ExxonMobil and its partners paid for all the exploration costs up front.
She was also open to providing clarity on how the US$460M was spent.
Brasington said that approximately $230M was spent drilling the Liza One well and early drilling costs for the follow-on wells. She said that this included mobilizing and demobilizing the drilling rig, helicopters and supply vessels in addition to drilling the well.
The ExxonMobil official said that approximately $140M was spent shooting the company’s 20,000km seismic campaign over the Stabroek Block. She said that this was ExxonMobil’s largest proprietary seismic campaign.
“It was required because no 3D data existed for the block. The seismic data is what helped us figure out where to drill the wells,” Brasington stated.
Furthermore, the official said that approximately $65M was spent over many years utilizing Geology and Geo-science experts and engineering teams to identify the potential prospects that the company and its partners wanted to drill and then to design the concept for safe and successful drilling
Brasington said that just about $25M spent on other costs and overheads, including block rental fees and training payments.