Gov’t yet to pronounce on Payara and Yellowtail audits

Mar 23, 2023 News

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…as Minister says K/News misrepresent facts

Kaieteur News – The Ministry of Natural Resources (MNR) in a statement to the media yesterday defended the Government’s position as it regards the auditing of ExxonMobil’s expenses, even as it attacked the Kaieteur News for what it deemed as misrepresentation of facts.

The statement comes in wake of incessant calls from citizens and other activists for updates on the issue, but instead of addressing the matter at hand, the ministry devoted huge chunks of the press release to attack Kaieteur News and its publisher, Glenn Lall.   “Many of the articles churned out by the media entity in question are based on the publisher’s narrow understanding of the sector, misrepresentation of the facts and sensationalism for economic returns on sales of what has manifested into the doom and gloom newsprint of the nation,” the statement read.

The MNR statement said: “Vice President, Bharrat Jagdeo, who plays a leading role in the judicious management of Guyana’s oil and gas sector, has repeatedly, by way of numerous press conferences, articulated updates relating to the management of the oil and gas sector, more particularly the conduct of audits.” It also noted that “Minister of Natural Resources, Vickram Bharrat in his presentation as part of Budget 2023, indicated publicly to the House that a preliminary audit of the 2018 to 2020 costs submitted by the Stabroek Block operator had been prepared, kick-starting the sixty day reply period that the operator, Esso Exploration and Production Guyana Limited (EEPGL), is entitled to.”

During the 60-days period which is still in effect, the operator will have an opportunity to review the findings and issue a response to the government.  The ministry added,  “Pursuant to the Production Sharing Agreement (PSA) between the contractor and the government, specifically under the Auditing and Inspection Rights of the Government, the minister has a legal right to carry out further investigation within sixty days of the contractor’s reply, should the report or reply require further investigation.”

Though the government statement spoke about the audit of ExxonMobil’s US$7.3 billion expenses, it failed to address the critical subject of reviewing Exxon’s third project before the stipulated timeframe in the PSA elapses. Notably, the contract with Exxon allows for expenses to be audited within two years. After this time expires, Guyana can no longer make claims on any inflated bills that may be caught during the audit process.

The Payara project was signed in 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 passed, but there is still no word from the government on auditing these bills. The Payara project is pegged at US$9 billion. These costs amount to 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 was pointed out in an article published by Kaieteur News in its Tuesday edition, where it was reported that VP Jagdeo and Minister Bharrat have both been dodging this responsibility.  See Link: https://www.kaieteurnewsonline.com/2023/03/21/govt-playing-hot-potatoes-with-exxons-audits/

Nevertheless, the MNR said it rejects the intent to undermine its work in building out a regulatory framework that adheres to international best practices and an economic model that will provide benefits for all Guyanese. The ministry pointed out that the government has taken a number of measures to regulate the sector since assuming office in 2020, none of which included measures to ensure timely audits are conducted.

It pointed to 10 specific areas explaining that: 1) the petroleum production licenses have been updated, 2) a new Local Content Legislation was enacted, 3) the Natural Resource Fund (NRF) Act was strengthened, 4) new conditions and fees were implemented and cost recovery audits commenced.  It was also noted that the administration has been continuously reviewing and modernising the legislative framework for the sector. Other key achievements according to the Ministry are “Updating of the 1986 Petroleum and Exploration Act, development of offshore safety regulations, development of hydrocarbon environmental management regulations, and promoting inter-agency collaboration to improve monitoring capabilities.”

To this end, the ministry stated it “will remain steadfast in achieving its goals in the expansion of the hydrocarbon sector, its sustainability, environmental soundness and lucrativeness, and will not be distracted by characters aimed at misinforming, misguiding and sensationalising matters.”

Misplaced priority

Meanwhile in responding to the attacks on his newspaper, Mr.  Lall offered that the ministry should channel its energies on addressing the Payara and Yellowtail audits and other critical areas, rather than hurling abuse at the press. “Government should list the misrepresentations by the Kaieteur News articles and Glenn Lall’s comments. I would like to urge the administration to focus on the questions and messages rather than trying to degrade the media entity and its publisher by throwing out baseless remarks to the public.”

Lall added, “Government should address ring fencing, capping of interest rates, full liability coverage, and tell us when the audit will be conducted for the Payara and Yellowtail projects. Tell us why they are not being conducted on time, why they are hiding the FDP (Field Development Plan) reports, and why the nation can’t see the quarterly reports on the expenses of the oil companies. Why are they being kept in the dark and silent on these issues?”

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• ExxonMobil, Glenn Lall, Kaieteur News, Ministry of Natural Resources (MNR), Publisher

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