ExxonM reduced disputed audit costs from US$214M to US$11M – VP Jagdeo

Aug 25, 2023 ExxonMobil, News, Oil & Gas

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…says delayed audits costing Guyana extra $$$                 

By Davina Bagot

Kaieteur News – The US$214 million in disputed costs, flagged by the British firm that conducted an audit of the expenses incurred by ExxonMobil during the period 1999 to 2017 has been reduced to US$11 million.

This was revealed on Thursday by Vice President (VP), Bharrat Jagdeo during a press conference at Freedom House. The VP was at the time responding to a question when he explained that the British firm, IHS-Markit that was hired by the former Coalition government in 2019 is still working along with the oil company to complete the process. IHS was contracted to review some US$1.6 billion in expenses racked up by Exxon over the 18-years’ period, prior to oil production.

The audit was awarded to the firm late 2019 but the comments period provided for by the 2016 Production Sharing Agreement (PSA), according to Jagdeo, has resulted in its delayed completion; costing the state additional resources.

During his engagement with the media, the former President said, “I don’t think it’s the audits that took a long time, like the last one cause we had a few months and then it got extended slightly.”

Rather, he explained, “It is the movement from the auditors, then GRA (Guyana Revenue Authority) has to do its review then we have to write Exxon. Exxon has a particular period; they send back their documents to us. Again, it’s an iterative process.”

Jagdeo said that the largest pool of disputes featured costs relating to inadequate documentation. To this end, the VP noted, “So they told me the first audit that was done under APNU, they had about something like US$214 million or over US$200 million not enough documentation. That came down to US$11 million when the additional documentation was submitted over the period. Now they are saying they found even more documentation.”

Given that more documentation continues to be submitted by Exxon, this means the monies that can be reclaimed by government will be reduced. Jagdeo told reporters that government will not be getting involved and is in fact reluctant to tell the GRA which costs to accept or reject.

Meanwhile, as it regards extra costs to complete the audit, the Vice President confirmed, “Yes it does cost us more when it’s extended.” He pointed out that government may be able to shorten this process by hiring more auditors or by instituting a specific timeline for completion. He however noted that during the iterative stage, the entire cohort of auditors may not be required.

The Ministry of Natural Resources (MNR) in a separate statement informed that it is still reviewing and verifying the expenditure audits and verification of profit oil associated with the Stabroek Block operator’s exploration and development campaign during the periods of 1999 to 2017, as well as the operator’s activities for the periods of 2018 to 2020.

The second audit was awarded in May 2022 to VHE Consulting which is a registered partnership between Ramdihal & Haynes Inc; Eclisar Financial; and Vitality Accounting & Consultancy Inc. The Local Consortium is supported by International firms- SGS and Martindale Consultants.

The MNR said the partnership with the foreign partner is geared towards improving the local content capacity within the sector.

According to the Ministry, “The current finalization of the petroleum audits being done by the Government of Guyana encompasses the thorough examination of transactional records including receipts and payments as outlined in the Petroleum Sharing Agreement (PSA) of June 27, 2016, the Petroleum (Exploration and Production) Act of 1986, along with the standards set forth by the International Financial Accounting Reporting Standards and the Council of Petroleum Accountants Societies (COPAS).”

It therefore indicated that the audit process for the period 2018 to 2020 will be concluded subsequent to a comprehensive review of any identified audit exceptions and resultant conclusions.

The Ministry of Natural Resources assured that it is working diligently with the GRA to bring the audits to a total closure as “efficiently as possible”. MNR added that the lessons learned from these processes will be adopted and applied for the 2021 to 2022 audit of the Stabroek Block and other offshore operations of the Guyana Basin. It did not say when this review would commence but noted that the GoG remains committed to ensuring that all standards and principles are followed to guarantee the careful management of the nation’s burgeoning petroleum sector.

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• audits, expenses, ExxonMobil, oil, reduced

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