ExxonMobil brazenly used Stabroek Block profits to pay drill ships to standby for Kaieteur and Canje Blocks

Oct 22, 2023 ExxonMobil, News, Oil & Gas

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Kaieteur News – The second audit report on ExxonMobil Guyana Limited’s expenses totalling US$7.3B has exposed how the company brazenly used Stabroek Block profits to pay for drill ship expenses related to two separate and distinct blocks—Kaieteur and Canje.

The auditors which consisted of local consortium, Ramdihal & Haynes Inc., Eclisar Financial, and Vitality Accounting & Consultancy Inc. with support from international firms, SGS and Martindale Consultants, expressed alarm at such a practice by the oil giant.

Expounding on their finding in this regard, the auditing team said Exxon had four drill ships from Noble Corporation working during early 2020. However, the COVID-19 pandemic made staffing all four vessels challenging. Auditors were informed that Exxon took the decision to suspend the services of the Stena Carron drillship and the Noble Tom Madden and move them closer to shore into a “hot standby” (idle but still operational) mode until the staffing issues could be alleviated.

Auditors said they had no qualms about Exxon charging 100 percent of the standby costs for the Noble Tom Madden against the Stabroek Block account since records show it was later used to service that block alone during the subsequent 12-month period.

In the case of the Stena Carron, auditors said records show Exxon had Stena on standby to execute works for Stabroek as well as Canje and Kaieteur which it walked away from this year. Records show that Exxon had the Stena Carron drill ship drill the Tanager-1 well in the Kaieteur Block beginning September 9, 2020 and ending November 23, 2020. Stena was then moved to the adjacent Canje Block where it worked on the Bulletwood-1 well beginning December 31, 2020 and ending March 2, 2021. Stena was also used to drill the second well in Canje called Jabillo-1 beginning March 12, 2021 and ending March 20, 2021.

In light of this, auditors said Exxon had no right charging the full standby costs to the Stabroek Block account if it had intentions of using the said ship on two other blocks. Exxon however told the auditors that it believes “all costs should remain charged to Stabroek” adding that its partners, Hess Corporation and CNOOC Petroleum Guyana Limited are in alignment on this matter.

Auditors however noted that such “alignment” is irrelevant to the case at hand and maintained that the standby costs ought to be shared among the blocks that utilized the Stena Carron. Exxon was then asked to return US$4,176,934 to the Stabroek Block account.

It should be noted that this audit report which Kaieteur News has seen is yet to be released to the public. Neither the Guyana Revenue Authority (GRA) nor the Ministry of Natural Resources would respond to requests by this newspaper over the last month for this to be done.

Another critical point of note is that this audit which covers Exxon’s US$7.3B expenses incurred for the period 2018 to 2020 did not entail a review of every bill related to that period as it was not a forensic audit. In fact, leader of the local consortium involved in the audit, Floyd Haynes, confirmed this with Kaieteur News in a previous interview.

Haynes had said that a forensic audit is done with the aim of identifying fraud and embezzlement with the goal of gathering evidence to be used in a court. He noted however that he and his team were hired to do a cost recovery audit pursuant to the parameters of the 2016 Stabroek Block Production Sharing Agreement (PSA). “The goal is to verify the accuracy or rather the legitimacy and validity of costs claimed,” Haynes had said.

He had further explained that the audit would not examine every single cost expended by Exxon. He said no audit is ever done that way. Haynes said auditors look at a sample of the costs incurred. He had said that sample is based on a number of things. “It could be high risk areas that you think have potential for exposure based on past experience or based on having done work in the industry before. So you take a sample of those, you look at it closely and then you ask for corroboration or additional information on those types of things and that’s what we did,” Haynes had said.

Kaieteur News had previously reported that the audit contract that was awarded to Haynes and his team back in 2022 for US$751,000 had a strict four-month deadline for completion. Notably, the US$7.3B costs the auditors examined, with the help of international consultants, pertains to the investments for the Liza Phase One and Liza Phase Two Projects which are currently producing approximately 400,000 barrels of oil per day.

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• brazenly, Canje, exposed, ExxonMobil, Kaieteur

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