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Exxon claiming over US$4M for office and payroll costs without sufficient documents – Audit report
Table showing costs recommended by the audit firm to be removed (Source: IHS Markit)
Kaieteur News – The expenses of oil major ExxonMobil has remained hidden from the nation, since Vice President Bharrat Jagdeo fears this newspaper may “nitpick” and misrepresent facts.
Although the media has been a critical watchdog in alerting the nation and its leaders to numerous egregious factors pertaining to the petroleum sector, the VP is not comfortable releasing the oil company’s cost recovery statements or forecasts for resources to be used to develop the sector.
He made his position clear during a press conference earlier this year. In the meantime, auditors have been combing through the expenses submitted by Exxon, prior to production activities. The findings so far have been damning to say the least.
Notably, the preliminary audit report of costs claimed by the American oil giant, ExxonMobil for its work programme in Guyana, between the period 1999 and 2017, has revealed that over US$4 million is being claimed by the operator for office and payroll expenses, even though the company lacks sufficient documents to justify and confirm that they are related to the petroleum operations.
In the preliminary report seen by this newspaper, IHS Markit- the firm hired to conduct the audit- explained that a total of US$5,110,999 of Venture Office expense was recorded in the General Ledger between 2004 and 2016 (excluding payroll). “The Audit Team recommended that US$185,695 of this total be removed from the Cost Bank as there was insufficient documentation to justify the purpose of these costs and conform that they are related to Petroleum Operations,” the document outlines.
Additionally, the report states, “A total of US$5,476,781 of Venture Office expense was recorded in the General Ledger in 2017 (excluding payroll). Several of the costs are recorded do not have an adequate level of transparency, restricting the Audit Team’s ability to determine the basis for the cost. As such the Audit Team recommends US$2,307,910 be removed from the Cost Bank.”
The audit team also noted in the report that another US$1,168,607 in costs had limited transparency, while some US$22,249 were not directly related to Petroleum Operations and US$605,421 have potential to be classified as overhead costs, along with US$10,216 of and non-itemized procurement credit card charges were all reviewed and recommended to be removed from the Cost Bank.
The Audit firm was hired to review all exploration and development costs submitted for recovery by Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), between 1999 to the end of 2017 in the Stabroek Block. The total expenditure that has been amounts to $1,677,774,727.
Following reports on the document by another section of the media, the Guyana Revenue Authority (GRA) issued a statement indicating that the said report is not final.
The initial report has however flagged over US$214M in questionable costs being claimed by the oil company. Kaieteur News had reported that hundreds of US-millions in contracts were singled-sourced by the operator as highlighted by the audit team. https://www.kaieteurnewsonline.com/2023/04/10/exxon-single-sourced-hundreds-of-us-millions-in-contracts/
Another glaring claim that was caught during the audit is some US$31.4 million by Exxon’s partners, Hess Corporation and CNOOC Petroleum Guyana Limited for costs they apparently racked up before they signed on to the 2016 Production Sharing Agreement (PSA).
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.
Exxon partners charged Guyana US$31M in expenses before signing contract – Audit Report Reveals
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