Int’l Group demands Guyana; other countries disclose how they monitor oil companies’ costs

Jun 28, 2023 ExxonMobil, News, Oil & Gas

– now required to disclose audit results

Kaieteur News – The Extractive Industries Transparency Initiative (EITI) has issued a new set of rules which demand that the governments of its member states make greater disclosures about the extent to which they are monitoring and auditing costs incurred by oil, gas and mining companies.

The international body underscored that such a move is critical since inflated costs incurred by these companies can affect how much revenue the government, and citizens by extension, receive from a project.

Under the 2023 EITI Standard, countries are now required to disclose how they monitor companies’ costs and to publish, at minimum, summaries of final tax and cost audits. Companies and governments are also encouraged to disclose capital and operating expenditures declared by companies, as well as total costs incurred since the commencement of the project.

Other new requirements include reporting more granular, comprehensive and higher quality disclosures on production and exports; disclosing sales agreements; introducing leaner processes for revenue disclosure; disclosing companies’ effective tax rates, incentives and deductions; and shedding light on companies’ costs and government systems for monitoring same.

The new requirements would therefore ensure Guyanese get greater disclosures on the costs being incurred by ExxonMobil on the Stabroek Block. In fact, citizens can use these new rules as grounds to demand more information on how the government is monitoring costs for five sanctioned projects totalling more than US$40B.

EITI implementing countries will be assessed against the 2023 EITI Standard from January 1, 2025. To facilitate the transition, EITI said countries are encouraged to integrate the changes in their next EITI work.

Guyana was this year temporarily suspended from the EITI Group due to its failure to submit a key report for fiscal year January 1, 2020 to December 31, 2020 since December 2022.

In accordance with Article 10 of Section 4 of the EITI Standard, an implementing country may petition the EITI Board to review its decision regarding suspension. Minister of Natural Resources Vickram Bharrat subsequently appealed the decision through addressing the Chair of the Board in a letter. The Board concluded however that the letter does not present additional evidence that would merit revising the Board’s decision. The Board reaffirmed Guyana’s temporary suspension, noting that the deadline for the publication of the outstanding report remains December 31, 2022.

ABOUT EITI

The Extractive Industries Transparency Initiative is a global standard for the good governance of oil, gas and mineral resources. It seeks to address the key governance issues in the extractive sectors.

By becoming a member of the Extractive Industries Transparency Initiative (EITI), countries commit to disclose information along the extractive industry value chain – from how extraction rights are awarded, to how revenues make their way through government and how they benefit the public. Through participation in the EITI, more than 50 countries have agreed to a common set of rules governing what has to be disclosed and when – the EITI Standard.

The EITI was formed in London in June 2003, when 140 delegates from governments, companies, industry groups, international organisations, civil society organisations and investors agreed the EITI Principles, establishing the EITI as a multi-stakeholder organisation and underpinning its mission.

The momentum for the EITI came in part from a growing body of research, which described how the potential benefits of oil, gas and mining activity were not being realised and mapped their association with increased poverty, conflict and corruption. Transparency and public dialogue were identified as an important starting point for remedying this “resource curse”.

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Int’l Group demands Guyana; other countries disclose how they monitor oil companies’ costs

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