No definitive timeline yet for completion of first audit of Exxon’s US$1.6B in expenses

Jul 28, 2023 ExxonMobil, News, Oil & Gas

Four years later…

Kaieteur News – Four years after contracting a British firm, IHS-Markit to conduct an audit of oil major, ExxonMobil’s expenses between the period 1999-2017, Guyana is still to verify whether some US$1.6 billion in costs were over stated.

Vice President, Bharrat Jagdeo on Thursday during his weekly press conference provided an update on the process, indicating only that the Guyana Revenue Authority (GRA) is likely to conclude the process soon. Jagdeo said he met with the Commissioner General of GRA, Godfrey Statia and Natural Resources Minister, Vickram Bharrat on Wednesday when he instructed that the audits be completed swiftly. I told them they got to move swiftly and wrap this up. The Commissioner indicated that he believes that they can wrap up the old audit very soon and make serious progress on the new one,” Jagdeo said.

The new audit the VP was referring to was the US$7.3 billion cost oil audit, awarded to VHE Consulting which is a registered partnership between Ramdihal & Haynes Inc, Eclisar Financial, and Vitality Accounting & Consultancy Inc. The Local Consortium was supported by International firms – SGS and Martindale Consultants.

Vice President, Bharrat Jagdeo

Back in April, Jagdeo reported that government received the final report from the team of auditors. He explained, “The report has been concluded and it’s now with the technical people and I’m not going to…they have to review it, the GRA (Guyana Revenue Authority), the technical group and they have to then make a (pronouncement). I am not interfering.”

While the findings of the US-multibillion dollar review remain unknown, a leaked report of the initial findings of Exxon’s US$1.6 billion bills revealed that some US$214 million could be contested by the state.

Back in September 2019, the APNU+AFC regime had awarded a contract to IHS Markit to audit the bills which ExxonMobil said it spent between 1999 and 2017.

Meanwhile, the review of the company’s US$7.3 billion costs was awarded since May, 2022.

The Stabroek Block Production Sharing Agreement (PSA) allows for audits to be conducted within two years, from the end of each calendar year. At the conclusion of the process, the Contractor must be furnished with the report and its findings within 60 days to provide a response. The response from Exxon will detail its objection or acceptance of the audit claim, along with explanations thereof. The contract also allows the subject minister to conduct further investigations within 60 days of receiving the Contractor’s response.

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 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.

Jagdeo previously said that these concerns were justifiable. The Vice President said, “The criticism about the length of time it is taking is fair but this audit is being done between GRA and the Ministry of Natural Resources with a minimum of 20 technical staff (overlooking the process) for two years. It is not secret…It is available to the technical staff.”

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British firm, expenses, IHS Markit, Natural Resources Minister, Vickram Bharrat

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