All oil costs to be audited; only a matter of time - VP

All oil costs to be audited; only a matter of time – VP

Oct 04, 2020 News

Kaieteur News – Vice President, Dr. Bharrat Jagdeo, said that all the costs being claimed by ExxonMobil and its Stabroek block partners will have to be audited, and that it’s only a matter of time before Government moves beyond the pre-contract audit.

Vice President, Dr. Bharrat Jagdeo

“There’s an audit ongoing,” he reminded on Friday, during a press conference, “but that covers only the period up to 2017.”
The audit of Exxon’s pre-contract costs is being undertaken by UK firm, IHS Markit.
In this case, the pre-contract costs range from 1999 to 2015, as well as additional costs from January to October 2016. The 1999 to 2015 costs are US$460M, and the rest is estimated by International Lawyer Melinda Janki to be about $500M.
Pre-contract cost includes contract costs, exploration costs, operating costs, service costs, and general and administrative costs and annual overhead charge as those terms are defined in the 1999 Petroleum agreement.
ExxonMobil intends to recover all of it from the sale of Guyana’s oil.
Jagdeo said that the audit is essential, as it is one of the things that can affect Guyana’s share of the revenue.
“Assuming we find some costs that are not acceptable to us, we’d have to bring them to ExxonMobil, that could change the cost oil and therefore, the share of profit oil.” Jagdeo said.
He said it will be important to go through, not just these but all costs claimed by ExxonMobil.
In this regard, ExxonMobil intends to charge Guyana billions of dollars for its developments in the block, from development costs to operating and decommissioning costs.
For Liza Phases One & Two, and Payara, the development cost estimates alone exceed US$18B.
The Vice President said that these audits will be done by international experts who have experience and know-how, especially when it comes to oil industry costs.
He said he is very concerned at the pace at which the costs are being audited, since the former government allowed almost five years to pass before it commissioned an audit for the pre-contract costs.
“We wanna move on that quickly because that could hopefully bring in some more resources…” he told Kaieteur News. “It’s just a matter of time.”

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