Norton calls for greater transparency in oil audits to avoid recurrence of US$214M fiasco

Oct 09, 2023 News

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Kaieteur News – The darkness that overshadowed the country’s first oil expense review must not be allowed to reoccur in future audits.

This is according to Leader of the Opposition, Aubrey Norton. During his Friday press conference, the Leader said there was need for greater transparency in the audit process.

He was at the time responding to a question from this publication when he said there were a number of measures that should be taken by the government to avoid the reoccurrence of the fiasco that unfolded with the US$1.6B audit of ExxonMobil’s expenses, incurred by the developer between 1999 and 2017.

Just last week it was announced that the Senior Petroleum Coordinator, Gopnauth Gossai attached to the Ministry of Natural Resources Petroleum Unit, would face disciplinary action for the “unauthorized” engagement with the oil company, resulting in US$214M in questionable costs, flagged by a British auditor, being reduced to US$3M.

The contract for the audit was awarded since 2019 by the previous Coalition administration but the audit report only made its way to the public in April, 2023 following extensive reports by Stabroek News.

To this end, Norton said government should take measures for greater transparency in future audits to avoid such mishaps.

In addition, the Opposition Leader reiterated the need for a specific timeline to be set for audits to be completed. At a previous press conference called for the law to stipulate a timeframe for the completion of oil and gas audits, given the lengthy duration of the first review conducted. See more in link below:

https://www.kaieteurnewsonline.com/2023/09/22/confusion-over-guyanas-first-oil-audit-highlights-need-for-law-to-determine-duration-opposition/

According to Norton, the reports on these critical processes must also be made public.

During the media conference, Opposition Member of Parliament (MP), Ganesh Mahipaul also weighed in on the subject, urging the need for capacity building as it regards audits of oil and gas companies operating locally.

He noted, “We have to strengthen the audit department at GRA (Guyana Revenue Authority) because the Commissioner General is on record saying that he is understaffed when it comes to that particular audit section at GRA…so there must be greater focus in strengthening that department and ensuring that we have the capacity to handle the audits.”

Norton added that it is also critical for persons hired to work in that department, be paid competitive salaries to avoid the workers from leaving to work for the oil companies. In addition, he said there must be a structured approach to satisfying the labour needs of the country.

“We also said that GOAL (Government Online Academy of Learning) seems to be goal-less. We need a structured programme in which we estimate the (labour) needs, not only in terms of auditing, but all elements of the sector and then we structure our training to get those persons trained so that we develop the capacity,” the Opposition Leader explained.

He was keen to note that such measures can reduce acts of corruption in the country.

Audits and the PSA

Presently, the audit of Exxon’s US$7.3 billion expenses is still ongoing. Meanwhile, over US$30 billion in additional expenses for projects approved in the Stabroek Block are still to be reviewed.

As per the Production Sharing Agreement (PSA) inked with the Stabroek Block Co-Venturers, the oil companies are entitled to provide comments regarding the findings of the auditors.

Section 1.5 of Annex C states: ‘At the conclusion of each audit, the Parties shall endeavour to settle outstanding matters and a written report will be issued to the Contractor within sixty (60) days of the conclusion of such audit. The report shall include all claims arising from such audit. The Contractor shall reply to the report in writing as soon as possible and in any event not later than sixty (60) days following receipt of the report indicating acceptance or rejection of the audit claim and in the case of a rejection showing explanations thereof. Should the Minister consider that the report or reply requires further investigation on any item therein, the Minister shall have the right to conduct further investigation in relation to such matter within sixty (60) days of its receipt of Contractor’s reply.’

It continues, ‘If within sixty (60) days of the Minister’s further investigation, the Parties are unable to agree to the disposition of the Minister’s audit claim, the claim shall be submitted to the sole expert in accordance with Article 26 of the Agreement. All adjustments resulting from an audit agreed to by the Contractor and the Minister conducting the audit shall be reflected promptly in the accounts by the Contractor and any consequential adjustments in Crude Oil entitlements shall also be made promptly. In the event that an audit claim by the Minister is not settled to the Minister’s satisfaction, ExxonMobil is entitled to recover any disputed amounts pending final resolution of the claim.’

 

 

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• Aubrey Norton, Audits and the PSA, Ministry of Natural Resources Petroleum Unit, opposition

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