Preliminary audit report for ExxonMobil’s US$460M pre-contract costs being examined - GRA Boss

Preliminary audit report for ExxonMobil’s US$460M pre-contract costs being examined – GRA Boss

Mar 26, 2020 News

Commissioner-General of the Guyana Revenue Authority (GRA) Godfrey Statia has confirmed that he is in receipt of an initial audit report for the US$460M in pre-contract costs Guyana must pay to ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL).
Statia said he is now examining the report, after which he will do his own internal work, and then have discussions with IHS Markit, the UK Company that was recruited to audit the billions of dollars ExxonMobil said it invested in the Stabroek Block.
“It is still a work in progress,” the Commissioner-General added.
In its Expression of Interest (EOI), the London-based firm had stated that it has the deepest source of information, analytics and solutions for the major industries such as oil, while noting that it has provided its expertise to clients in over 165 countries for more than 50 years. The company further stated that it understands the holistic impact of costs on upstream operations.
In terms of what it is bringing to the table for Guyana, IHS said that it has a comprehensive global database of exploration and production costs. It said that this data includes local and regional costs at the component level so as to allow for detailed comparisons.
IHS also said that it has developed proprietary software solutions and tools to gain insights into costs faced in the exploration and production sector. It said that it uses cost estimation tools such as Que$tor and Vantage, paired with its rich databases, to provide industry leading cost analysis.
PRE-CONTRACT COSTS
International lawyer, Melinda Janki, was one of the first persons to note that the country is neck-deep in pre-contract costs.
During a panel discussion that was held on Guyana’s oil contract with ExxonMobil at Moray House, Janki reminded that the country has to pay US$460M in pre-contract costs. This covers the period 1999 to 2015. But there is a second lot. Janki noted that the contract specifically states that Guyana is to pay contract costs from January 2016 to when the deal was signed on October 7, 2016.
The international lawyer had said, “The costs for the whole of 2016 were about US$583M and if you apportion it to October, you get roughly US$400M.” This by her estimation brings the pre-contract costs to US$960M. Be that as it may, the costs being audited by IHS Markit is the US$460M portion that is listed in the Stabroek Block Production Sharing Agreement (PSA) as recoverable.

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