‘We have acted in good faith on Govt.’s audit of US$1.7B expenses’

‘We have acted in good faith on Govt.’s audit of US$1.7B expenses’ – Exxon

Sep 23, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – With the Guyana Government announcing that an investigation will be launched into the mishandling of an audit into ExxonMobil’s expenses in the Stabroek Block, the company broke its silence in the matter yesterday, assuring that it has always acted in good faith.

ExxonMobil Guyana Limited, Alistair Routledge

Vice President, Dr. Bharrat Jagdeo said yesterday that a probe is forthcoming to understand who within the Petroleum Unit of the Natural Resources Ministry deviated from advice to close the audit of Exxon’s expenses with US$214M in questionable expenses. The US$214M figure was flagged by British company, IHS Markit following its audit of Exxon’s US$1.7B in expenses incurred from 1999 to 2017 in the Stabroek Block.

The Guyana Revenue Authority which is tasked with being government’s advisor on these matters had issued a notice to the ministry on August 8, 2023 endorsing the figure flagged by IHS and recommended that the matter be closed. Jagdeo said a probe, on the instruction of President, Dr. Irfaan Ali, is necessary to understand why ministry officials deviated from GRA’s advice and engaged Exxon in reducing the disputed sum to US$3M.

Exxon for the first time issued a statement yesterday, clarifying that it is not unusual for an audit to find very few issues with its spending. The oil company said, “Auditing an oil and gas joint venture operator’s expenses is a standard process by co-venturers and governments to ensure only appropriate costs are charged. It’s normal for auditors to highlight focus areas by sharing a draft report that is later addressed with additional documentation.”

The company added, “Our experience is that typically, very few, if any, costs are ultimately rejected, reflecting the integrity and quality of our accounting activities.”

Exxon further noted that the government has audit rights to its expenses as guaranteed under Article 23 and Annex C of the Stabroek Petroleum Agreement. Exxon said, “We have acted in good faith and co-operated with the government and their consultants appointed for the cost recovery audit of the 1999-2017 years.”

It added, “We have supplied responses and documents to the issues raised in the draft audit report prepared for the Government by their consultant. We now await a formal response from the Government, after which we will enter into further dialogue as necessary.”

Notably, ExxonMobil did not name the ministry officials it engaged on the reduction of the costs from US$214M to US$3M.

Government has since said the Natural Resources Ministry will be writing to the Exxon to confirm that the audit has been closed and the US$214M in disputed costs stand.

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Alistair Routledge, Dr. Bharrat Jagdeo, ExxonMobil Guyana Limited, mishandling, Vice President

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