Govt. still to conclude probe into ExxonMobil’s US$214 million audit fiasco

Oct 03, 2023 ExxonMobil, News, Oil & Gas

Two weeks later…

Kaieteur News – Two weeks after it announced an investigation into the “unauthorized engagement” by staff of the Ministry of Natural Resources Petroleum Unit with U.S oil giant ExxonMobil over the company’s US$214M questionable expenses, the government is yet to give an update on the status of the probe.

Vice President, Bharrat Jagdeo had announced that a thorough investigation would be conducted to identify the individuals responsible for engaging the oil company in reducing US$214 million in questionable costs flagged by a British auditor to US$3 million. During a press conference at Freedom House on September 21, the chief policy maker for the oil sector told reporters that the Ministry of Natural Resources (MNR) would then provide a report to Cabinet for review which would be used to determine the appropriate disciplinary action.

On Monday, this newspaper reached out to subject Minister, Vickram Bharrat for an update on the investigation. The minister would only say that it is ongoing. He also offered no timeline for the completion of the investigation. In keeping with its advisory role, the Guyana Revenue Authority (GRA) wrote the ministry on August 8, 2023 advising that it had no objection to the US$214M first flagged by IHS Markit and they should proceed to closing the US$1.6B audit of Exxon’s expenses, incurred between 1999 and 2017.

Minister of Natural Resources, Vickram Bharrat

Jagdeo had explained that the ministry did not adhere to this recommendation and engaged in discussions with Exxon to reduce these sums. The Vice President said the Head of State, Dr. Irfaan Ali was appraised of the developments and there was an agreement for a full investigation. He said too that the ministry now has to communicate to Exxon that based on the advice of GRA, the disputed sums will remain at US$214M. Importantly, Jagdeo said Exxon would not be pulled into the investigation.

Jagdeo said, “We don’t know what they sent and I am not interested in what they sent because that could be used in arbitration should we go there. I am more interested in who authorized this and why.”

Dangerous precedent

In the meantime, the Opposition believes Guyana’s first oil audit has set a dangerous precedent for the US$40B in reviews still to be completed. These expenses relate to the five sanctioned projects in the prolific Stabroek Block, where over 11 billion barrels of oil have been discovered.

Notably, a consortium was hired by the People’s Progressive Party (PPP) administration to undertake a second audit of ExxonMobil’s expenses incurred between 2018 and 2020. That review is still to be finalized. The auditors were tasked with verifying the costs racked up by the company, amounting to some US$7.3 billion. The five sanctioned projects in the Stabroek Block carry a price tag of about US$40 billion which Guyana must scrutinise to make sure it is not being over charged. Economic Advisor to the Opposition Leader, Elson Low recently told Kaieteur News that with the reduction of the costs from US$214 million to US$3 million, Guyanese are now left to fear what may be the outcome of the audits yet to be undertaken. He said with the British auditor flagging over US$200 million in costs as questionable from the US$1.6 billion exploration costs, Guyana could expect inflated costs amounting to billions of US-dollars from future audits. More importantly, Low noted that failure by the government to contest those costs or to allow a reduction from the oil companies can deprive the country of much-needed revenue to boost the quality of lives for its citizens.