Gov’t playing ‘hot potatoes’ with Exxon’s audits

Mar 21, 2023 News

…as Jagdeo says “ask Vick” and Vick says “ask Jagdeo”

Kaieteur News – The Government of Guyana (GoG) attitude is akin to the children’s game of ‘hot potatoes’ when it comes to accepting responsibility for the billion-dollar review of expenses to develop the offshore oil and gas resources in the Stabroek Block.

Minister of Natural Resources Vickram Bharrat

Vice President Bharrat Jagdeo

Though on a much grander scale, the elected officials seem unwilling to accept the duty of conducting this process, as on one hand, Vice President Bharrat Jagdeo who is in charge of the petroleum sector and functions as Minister of Finance in the shadows, directed this newspaper to speak with Minister of Natural Resources, Vickram Bharrat concerning the audits.

At his last press conference, held on March 5, at the Arthur Chung Conference Center, Kaieteur News asked the VP to say when the audits for the third and fourth ExxonMobil projects, Payara and Yellowtail, respectively, will be conducted to which he responded, “Which Payara and Yellowtail? From 2020? I don’t know, ask Vick.”

When this newspaper reached out to the Minister on Friday however, his position was that the VP had already addressed the subject. Bharrat explained, “VP gave an update on the audit at his last press conference. Position hasn’t changed.”

Kaieteur News however informed the Minister that Jagdeo had directed the issue pertaining to the Payara and Yellowtail audits to him, to which he did not respond. The Production Sharing Agreement (PSA) signed between the GoG and the oil company allows for audits to be conducted within two years after each Calendar year.

According to the contract’s Annex ‘C’ Section 1.5 (a), “The Minister shall have the right to audit upon ninety (90) days written notice, at his sole cost and expense, accounts and records of the Contractor, maintained hereunder with respect to each Calendar Year within two (2) years from the end of each such year…”

Notably, the Payara project was approved by the administration on September 30, 2020, paving the way for Exxon to commence investments to develop the third oil project. This means that more than two years have already elapsed and there is no word from the government on auditing these bills. The Payara project is pegged at US$9 billion. This is more than two times this year’s National Budget, which was approved to the tune of US$3.9 billion (GYD $781.9 billion).

This newspaper had reported that if the two-year deadline as prescribed in the Stabroek Block Agreement, passes and Guyana fails to audit ExxonMobil’s subsidiary, cost recovery bill, the country has no choice but to allow the oil company to recover US$9B for its Payara Development Project in the Stabroek Block, without making any objection.

The lopsided petroleum deal in which the PPP now refuses to change allows the oil giant to extract 75 percent of the oil earnings towards servicing these expenses. The remaining 25 percent is deemed profit oil which is then split evenly between the contractor and Guyana. Given the country’s already meagre earnings, activists have been clamouring for special attention to be given to the audit process, as the country could be shafted even further on this end. Presently, the nation is awaiting the audit reports for a review process that was awarded to check the bills of the contractor between 2018 and 2020. That contract was signed in May last year, with the final report expected to be handed over to the GoG by month end.

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Audit, Contract, ExxonMobil, Government of Guyana (GoG), PSA, review

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