Oil Blocks auction…Govt. putting more wood into fire as US$9B audits of Exxon still pending – Patterson

Aug 14, 2023 News

---

Kaieteur News – With a current manpower shortage at the Guyana Revenue Authority (GRA) hampering the audit of expenses by oil companies, the Shadow Minister of Natural Resources, David Patterson believes the Government of Guyana (GoG) is only adding more wood to the fire by failing to first plug the gap before increasing the burdens of the agency.

Presently, Guyana is yet to complete the audit of oil major ExxonMobil’s expenses that were incurred during the period 1999 and 2017. Those bills amount to US$1.6 billion, which Guyana is expected to pay. Meanwhile, another review of the company’s expenses amounting to US$7.3 billion is yet to be completed. Those costs, according to Exxon, were incurred during the period 2018 and 2020. Notably, the two audits mean that Guyana is yet to verify US$8.9 billion being claimed by the company.

In an exclusive interview with Patterson yesterday, the former Minister of Public Infrastructure noted that the revelation by the GRA boss, Godfrey Statia is very “stressing”. He explained that since the establishment of the Natural Resources Fund (NRF) the administration indicated that the GRA along with the Audit Office of Guyana would be scrutinizing the expenses of the oil companies, however both institutions lack the required staff to complete this fundamental task.

Noting the complaint that trained specialists are being snatched by the petroleum companies, Patterson underscored that the country remains grossly underprepared for the management and oversight of the new US-billion dollar sector. In addition to the revenue agency being unprepared, the Opposition member flagged that the Environmental Protection Agency (EPA) also lacks the technical staff it requires to regulate the industry, even as the country presses ahead with the auction of 14 new oil blocks.

Patterson explained, “The Natural Resources Minister reported to the Natural Resource Committee about two weeks ago, that the first audit is back with GRA for them to go through it. Now they are understaffed, they can’t even get to that and every single day, every single second Exxon is racking up more expenses which they will claim is cost recoverable.”

In sharing what he believes is a short term solution to the issue, the former Minister said Guyana should now move to import the skills needed. He urged, “We can’t wait any longer for the agency to get up to speed. Things are moving too quickly, the country is losing too much money and Exxon is milking our unpreparedness.”

Further to that, he urged that government must continuously train Guyanese so that the country would be able to effectively audit the oil companies operating offshore.
He reasoned, “I think we have at least 3,000 graduates out of University every year in all disciplines. We should be selecting at least 10 of them and send them to do a Masters or some form of specialized training. You could have done accountancy at U.G, you could have done any related subject and then you do the specialized training so this question of us not being prepared is a no longer a major issue.”
Patterson pointed out that he moved an amendment to the Petroleum Act in the National Assembly to increase the funding for capacity building since he believes Guyana has the requisite raw materials to get the job done. This was ultimately defeated in Parliament, along with several other proposed changes to the legislation.
“There is no way you can say we cannot afford to send them to wherever they need to go to get specialization so just like anywhere else in the world, you put them on a contract for three years and if they want to move on after, we can do that,” he said. The Shadow Minister of Natural Resources believes this process would ensure that the country is outfitted with the required number of trained specialists.

More wood into fire
Patterson told Kaieteur News that the country should not move to entertain more oil companies through the auction of 14 new oil blocks offshore until the human resource gap is plugged.
According to him, “We should not even be heading to an auction in the absence of the required manpower we need to conduct these critical audits. We are so far behind in every area, we can’t get Exxon audited after they have been here since 1999 when they got their first license, and they can’t be audited now in 2023. For five years now we are producing oil and can’t get the company audited.”

Patterson argued that ExxonMobil is currently producing oil from two of the projects in the Stabroek Block, with a third likely to commence production before the end of the year. Moreover, an application for the fifth offshore development is pending approval at the EPA. To this end, the former Minister argued, “Just with what we have, we are so far behind. Why are we pushing to get more when we can’t even fix what we have at the moment? I think that we are unprepared and I think that we should sort out these issues before.”

He stressed, “we have to sort out things, if not we will just end up like one of those failed states with all the resources and nobody to extract it…while the country is saddled with debt and crime…we haven’t sorted out those simple problems but we are still trying to put more wood into the fire.”

Human resource shortage at GRA
During a Public Accounts Committee (PAC) meeting on July 31, 2023, Commissioner General of the GRA, Godfrey Statia explained that a key unit established to review the expenses of oil companies operating in the country is presently grossly understaffed, with the agency anticipating that the gap will be plugged in a few years’ time.

The tax chief noted that while 31 employees are on roll, 65 persons are required for the job. As such, he underscored that the Cost Recovery Unit lacks most of the manpower needed to conduct reviews of the petroleum companies.

He was keen to point out the GRA has seen an increased presence of petroleum operators and contractors, with the agency still trying to catch up.
In 2019, Statia said the agency had 15 trained personnel in this department; however, it has now grown to 31, with at least 34 more employees needed. Back then, 121 petroleum companies were operating in the country, however it has now increased to more than 350, with this number also still climbing.

In the meantime, the Commissioner General said GRA has been conducting “selective audits” with the tax body concentrating its efforts on clawing back the largest return. In addition to that, he said, “We have to use external accountants to do the cost recovery audit and we work along with them and we utilize their analysis and their findings to guide us in our examination and review of the accounts that would have been submitted by the oil and gas players.”
See link for more details. https://www.kaieteurnewsonline.com/2023/08/02/oil-companies-stealing-gra-trained-auditors-with-big-statia-tells-parliamentary-committee/

---

• Audit, expenses, ExxonMobil, fire, Wood

---