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Exxon partners charged Guyana US$31M in expenses before signing contract – Audit Report Reveals
Kaieteur News – Before Hess Corporation or CNOOC Petroleum Guyana Limited signed on as partners with ExxonMobil to the 2016 Production Sharing Agreement (PSA) for the Stabroek block, they apparently racked up US$31.4M in certain expenses which they claim Guyana must pay.
This was one of the major findings in an ongoing audit of US$1.6B in expenses incurred between 1999 and 2017 by ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) and its above-mentioned partners. In the report prepared by UK firm, IHS Markit, it states that “a total of US$31.43 million was added to EEPGL’s 2017 Cost Recovery Statement.” The UK firm alluded that all costs recovered by Exxon and partners must be traced back to a comprehensive General Ledger. That Ledger would show the details on how the money was spent. In the case of the US$31.4M, the auditors said Guyana was billed for this but they could not find the details for this in the General Ledger.
IHS said this sum was related to payments made by the Co-Venture partners, “many of which were incurred prior to the Co-venture partners being signatories to the PSA.” IHS further noted that the validity of these costs for recovery has not been demonstrated by EEPGL and should therefore be contested by Guyanese authorities. Commissioner General of the Guyana Revenue Authority (GRA), Godfrey Statia was keen to note last week that the audit of ExxonMobil’s bills covering the period US$1.6B remain an ongoing process, with the Guyana team taking every precaution to vet findings revealed by IHS.
Statia had also said that the government is now at the stage of awaiting feedback from Exxon’s subsidiary regarding the findings. He also did not provide a timeline on when this process would be completed. Statia further noted that the government will make the report public at the appropriate time. The length of time the audit report is taking to be completed has caused some degree of concern among observers. Some individuals have said, for example, that authorities should properly explain why it is taking so long to complete an audit for a company when the Audit Office of Guyana takes approximately 12 months to audit and produce a report on the nation’s accounts.
There are also concerns about the accelerated pace at which the government is approving oil projects and the difficulties that would ensue for cost regulation and monitoring since it is still stuck at auditing costs associated with the 1999 to 2017 era. A second audit is currently underway for costs totalling US$7.3B which were incurred from 2018 to 2020. That contract was awarded last year in May. That too is still ongoing.
- Chief Executive Officer (CEO) of Hess Corporation, CNOOC Petroleum Guyana Limited, Esso Exploration and Production Guyana Limited (EEPGL), ExxonMobil, Hess
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