Vickram Bharrat fails to give update on Exxon’s US$7.3B audit

Jan 17, 2023 News

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– again says process still ongoing

Kaieteur News – The review process of some US$7.3 billion in bills handed to Guyana by United States (U.S) oil giant ExxonMobil is still ongoing.

This is according to Natural Resources Minister, Vickram Bharrat who on Saturday had promised to give an update on the audit, being conducted by a U.S group with the assistance of a Guyanese team.  The contract was signed on May 24 last for 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’.

President Irfaan Ali in November last year told this newspaper that the process was estimated to wrap up before the end of 2022, with the first report ready by December.  However, Minister Bharrat explained, “No that one is ongoing. It’s 120 working days so they went to Oklahoma already, they went to Houston. They are back in Guyana now. We have already received a first report so we should receive the second one really soon.”

The Minister said that the reports will be made public when completed.  “I don’t know who is calling for it to be laid in Parliament so I wouldn’t comment on that…they will be public documents in any case.”  As Guyana awaits the completion of a US$7.3B cost recovery audit of ExxonMobil’s expenses between the years 2018 to 2020, some stakeholders are not very confident that this process will bear much fruit for the country. The review is zooming into costs incurred for the Liza One and Liza Two Projects which are currently producing over 360,000 barrels of oil per day.

Economist Ramon Gaskin, who spent several years of his professional career conducting audits, in an exclusive interview with this newspaper in November last said what the country needs is a thorough audit, rather than a team to check the bills it received from Exxon. His comments come on the heels of a revelation made by Financial Analyst and Certified Accountant, Floyd Haynes who is part of the team conducting the audit on behalf of Guyana. He sought to assure the public that a forensic audit or a witch-hunt is not being conducted. He explained that, “A forensic audit is with the aim of identifying fraud and embezzlement with the goal of gathering evidence to be used in a court.”

Contrarily, a cost recovery audit is being done pursuant to the parameters of the 2016 Production Share Agreement (PSA) governing the Stabroek Block. “The goal is to verify the accuracy or rather the legitimacy and validity of costs claimed…There is a huge difference so I wanted to clear that up,” he said. Gaskin was keen to point out that the review process demands more than checking the expenses. He reasoned that it requires a competent team, expertise and knowledge, especially since the audit is intended to confirm some US$7.3B in expenses the country will pay for.

In the meantime, Chartered Account Christopher Ram believes that Guyana is on a dangerous path if auditors believe that they are merely required to check ExxonMobil’s expenses to verify the expenditure for the period 2018-2020. Ram in a guest editorial published in this newspaper said while it is true that the audits have to be conducted in accordance with the Stabroek Block PSA, the auditors are not restricted. Ram, who is also an attorney, is adamant that Haynes, the Guyanese spokesperson on the audit panel, along with his team must be aware that oil production ran for a full year in 2020 and all the records pertaining to the production, allocation of production share, costs incurred, recoverable and non-recoverable expenditure and costs to be carried forward all form part of the records of the oil companies that should be subjected to scrutiny.

To this end, Ram noted, “The suggestion by Mr. Haynes that this is merely a cost recovery audit is dangerously wrong. [I] never thought it would be necessary to point out to a team of Chartered Accountants that they have a duty to familiarise themselves with the technical details of the Agreement under which they have undertaken a professional engagement; that costs are classified, defined and allocated across six specific heads; that claims for recoverable expenses must satisfy three conditions; that records have to be maintained to allow for the preparation and submission of seven Statements to the Government.” As a consequence, he argued that Guyana should be conducting more than just a cost recovery audit.

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• Economist Ramon Gaskin, ExxonMobil, Natural Resources Minister, President Irfaan Ali, Vickram Bharrat

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