Oil Auditors block GRA’s attempts to verify US$28M claims by Exxon partners

Apr 12, 2023 News

Kaieteur News – The Guyana Revenue Authority (GRA) has been fighting tooth and nail to understand how two Stabroek Block partners charged Guyana some US$28.8M in expenses they incurred before signing onto a Production Sharing Agreement with ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL).

In a report seen by this newspaper, GRA said on two occasions, it pushed British Auditor, IHS Markit to examine the Joint Operating Agreements between ExxonMobil and its partners, Hess Corporation and CNOOC Petroleum Guyana Limited.

Guyana’s auditing team which includes GRA, had urged for the Joint Operating Agreement (JOA) among the partners to be scrutinized since the US$28.8M could not be traced to EEPGL’s General Ledger.

The first request for this to be done was communicated to IHS in May 2020. The British company rejected the request as well as the arguments proffered by the revenue authority on this matter. The company essentially told GRA that the documents are simply not relevant.

GRA insisted however that reviewing the agreements would be a critical component to the analysis of how certain costs ended up in the cost bank.

In another IHS Report dated November 2020, IHS maintained its position, stating that “Cost Recovery Audits do not require a review of the JOA as this is considered a confidential agreement between parties with no material implications on cost recovery.”

In its third report dated March 11, 2021, the British firm maintained its unchanged position on access to the JOA. GRA in its report stressed that this ought to be done. It is not clear if they were able to reach an agreement.

It is now more than three years since the audit of US$1.6B in expenses for the oil-rich Stabroek Block and it is yet to be completed. Confirming the status of the audit was Commissioner General of the Guyana Revenue Authority, Godfrey Steven Statia. His clarification came on the heels of two articles published by the Stabroek News on IHS Markit’s report that it provided to the PPPC regime. Stabroek News comprehensively, and clearly, outlined that there were some US$214M in costs that could be contested by State authorities. GRA’s boss did not denounce these figures as inaccurate.

He did note however that IHS’ report, as is being quoted, is not the final document, adding that government is now at the stage of awaiting feedback from Exxon’s subsidiary.

He also did not provide a timeline on when this process would be completed. Statia also noted that the government will make the report public at the appropriate time.

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 May. That too is still ongoing.

British Auditor, Guyana Revenue Authority (GRA), IHS Markit, Production Sharing Agreement, Stabroek Block

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