Contract signed for four-month audit of US billions spent by Exxon over three years

May 25, 2022 News

By Davina Bagot
Kaieteur News –The Government of Guyana has finally signed a contract for a four-month review or audit of ExxonMobil’s expenses between the years 2018 to 2020 that has already been billed to the country.
The signing took place yesterday at the Duke Lodge in Georgetown. Importantly, the audit will cost Guyanese some US$751,000. This is a discounted price from the US$1 million that was being sought by the consortium to undertake the review. The consultancy was awarded to VHE Consulting which is a registered partnership between Ramdihal & Haynes Inc; Eclisar Financial; and Vitality Accounting & Consultancy Inc. The Local Consortium is supported by International firms- SGS and Martindale Consultants for the ‘Cost Recovery Audit and Validation of the Government of Guyana’s Profit Oil Share’.
Natural Resources Minister, Vickram Bharrat told the gathering that the audit was delayed as the government was trying to ensure local companies undertake the important task even as it pushes for the inclusion of Guyanese in the oil and gas sector.

However, he pointed to the fact that the former government did not carry out the important review of the expenses it was billed, hence the belated audits are being conducted. According to him, the government should have been focusing on the 2020 to 2021 audits; however it must move the process forward.
At the conclusion of the event, this newspaper questioned the minister whether the country will be able to make any claims, given that the two-year period allocated for the audits would have elapsed. To this he explained: “we don’t know what the audit will find. I mentioned it in my presentation that there was speculation that the time has elapsed and we cannot do the audit or we cannot make any claims but that is not true. We have been in constant engagement with the operator and they are willing to support and be part of the audit.”
Bharrat was also asked whether he feels the four-month time span was adequate for the audit of the US billion-dollar expenses to which he assured that the government is quite comfortable with the arrangement. “We consulted with the company before we actually set a timeframe. It wasn’t done by the ministry in isolation. We would have consulted with them and this is the time that they are comfortable with; it’s a timeframe that we are comfortable with too, as well as the international companies who are involved, and they will be working dedicatedly on the audit for the next four months so we are pretty much comfortable that it can be completed by the consortium and the international partners.”
The minister assured that the report will be made public, following the review of the expenses. “This audit? Yes, sure. This audit when it’s completed? Yes.” The document will be filed at the Attorney General’s office, he said. This is particularly important as the public is unaware of the outcome of the audit of the US$460 million pre-contract costs, which was done by IHS Markit. The contract to the UK firm had cost US$300,000.
Nevertheless, Bharrat told media operatives that government will rely on the findings and recommendations of the report to take “appropriate steps”. While qualifying the government’s decision to use foreign companies on the review committee, the Minister explained, “The technical company is needed because our local auditors might be very familiar with the auditing (of) basic expenses (such as) fuel, meals, transportation, but when we are talking about jumpers and risers and Christmas trees, FPSO (Floating Production Storage and Offloading vessel)and these technical terms obviously they will need that kind of technical knowledge and expertise onboard to assist them to have a thorough exercise being done.”
He added that there will be new arrangements for future audits even as the government seeks to conduct annual and even bi-annual cost reviews for ExxonMobil.
As part of the agreement signed on Tuesday, local agencies will be trained to undertake the technical reviews in the future. For instance, on-the-job training will be had with the staff of the Guyana Revenue Authority (GRA), the Office of the Auditor General (OAG), and the Ministry of Natural Resources (MNR) and other agencies, with the objective of enhancing local capacity. This newspaper had reported that due to the nation’s failure to conduct cost audits within the two-year deadline prescribed in the Stabroek Block Agreement, Guyana has no choice but to allow ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), to recover all stated costs for its Liza Phase One and Two Projects. Both initiatives total approximately US$9.5B. Under the Production Sharing Agreement (PSA) inked with EEPGL—ExxonMobil—and their partners, the Guyana Government has up to two years to audit and query the spending had by the US oil major, failing which, the bills would have to be paid, as is.