ExxonM billed Guyana US$753M for foreign workers here and abroad

Oct 25, 2023 ExxonMobil, News, Oil & Gas

Audit of US$7.3B Liza 1&2 Bills reveal…

– Auditors clueless on what overseas employees did for Stabroek Block Projects

Kaieteur News – ExxonMobil Guyana Limited spent a whopping US$759M on labor costs between 2018 and 2020. This was observed in an audit report compiled by local team, Ramdihal & Haynes Inc., Eclisar Financial, and Vitality Accounting & Consultancy Inc., with backing from Martindale Consultants. The auditors found that US$753M was for foreign employees alone.

In providing a breakdown of the US$753M, auditors said US$93.1 million was for expatriates serving in-country at ExxonMobil Guyana Limited which has its head office in Duke Street, Kingstown. For the overseas workers permanently assigned to its Guyana operations, the labour cost was US$594.4M. For those foreign employees that were only temporarily assigned, the employment bill was US$66.4 M. For local employees, the labour bill was US$5.1M.

Auditors outlined that employee costs for Exxon Mobil Guyana Limited formerly known as Esso Exploration and Production Guyana Limited (EEPGL) is catered for in the Stabroek Block Production Sharing Agreement (PSA) as a recoverable expense. Be that as it may, auditors flagged several anomalies regarding the manner in which Exxon bills the Stabroek Block account for employment costs. Expounding on this front, auditors said the majority of employees attached to ExxonMobil Affiliates overseas are required to keep time-writing entries. This is where an employee documents the hours spent on Stabroek Block Projects.

An hourly rate is calculated, ranging from US$ 343.00 to US$ 495.00 per hour, with the majority of the rates closer to US$ 400.00 per hour. The rates represent an employee’s salaries, wages, benefits, and all other related employee costs.

Approximately 1,500 employees had time-sheets throughout the review period (2018 to 2020). The employees were attached to the following Affiliates: ExxonMobil Development Company, ExxonMobil Global Projects Company, ExxonMobil Production Co., ExxonMobil Upstream Research Company, ExxonMobil Exploration Company, ExxonMobil Canada Ltd. And ExxonMobil Exploration and Production Mozambique (Ventures) Limited.

Auditors said they did not examine all 1,500 time sheets but based on their test of a sample of those, it was not able to determine what works were actually executed for Guyana. Auditors said none of the timesheets or other time tracking information provided any detail as to what an Affiliate employee was doing for the Stabroek Block Operations. “The information was simply printouts of the employees and Cost Objects or Orders to which they coded their time,” the auditors said.

Auditors also noted that there were significant costs for ExxonMobil Affiliates employees outside of Guyana that were temporarily assigned to Stabroek-specific projects. These employees were attached to ExxonMobil Netherlands, ExxonMobil Singapore, ExxonMobil Exploraco Brasil LTDA, and ExxonMobil Quimica LTDA.

Auditors found that Exxon was paying these Affiliate employees their salaries as well as a profit. Auditors said this profit margin is not recoverable based on the terms of the Stabroek Block Production Sharing Agreement (PSA). Auditors therefore requested that the Stabroek Block account must be credited with US$ 3,314,007. Exxon at the time of the report’s compilation, only returned US$2,203,071. The remainder totalling $1,110,936 is still outstanding.

It should be noted that this audit report on Exxon’s US$7.3B expenses incurred from 2018 to 2020 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 did not entail a review of every bill related to the 2018 to 2020 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. Kaieteur News had previously reported that the audit contract was awarded back in 2022 for US$751,000 and had a strict four-month deadline for completion. Notably, the US$7.3B costs which the auditors examined pertain 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.