OGGN calls for greater transparency in future audits of ExxonMobil’s US$46 billion expenses

Dec 03, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Civil society group, Oil and Gas Governance Network (OGGN) is calling on the government of Guyana to ensure greater transparency in the future audits of ExxonMobil’s expenses.

ExxonMobil holds a 45 percent interest in the Stabroek Block, which is operated by its affiliate, ExxonMobil Guyana Limited (EMGL). Its partners, Hess Guyana Exploration Ltd. and CNOOC Petroleum Guyana Limited hold 30 percent and 25 percent interest respectively.

OGGN in a recent missive highlighted that the pace of discovery in the Stabroek Block has been astounding, with over 32 discoveries made to date.

With daily production likely to reach 620,000 barrels per day (bpd) by the first quarter of 2024, the advocacy group noted that total output is on target to achieve 1.2 million bpd by 2027.

The Guyanese citizens were keen to note that so far six projects are in the pipeline, at an estimated price tag of US$55 billion. OGGN said that while two audits have commenced to the tune of US$1.7 billion and US$7.3 billion, over US$46B in expenditure is still to be reviewed.

With no definitive timeline or schedule for the remaining audits, the group said it is hopeful for greater transparency in this regard.

It stressed, “To put US$55 billion in perspective, before oil production started at the end of 2019, Guyana’s annual national budget was US$2 billion/year. Thus, US$55 billion in expenses is more than what Guyana has spent in the last 27 years combined. Given the astronomical sums involved and the controversies surrounding the 1999 to 2017 audit, and the 2018 to 2020 audit, one would hope the government could be more transparent with these audits for the public’s benefit.”

The Network contended that both the 1999 to 2017 audit which was completed in 2021, as well as the most recent audit report has not been made public by the government. According to OGGN, “This would naturally raise the question – ‘is the government protecting the oil companies for overbilling Guyana’?”

In addition to the organization’s call for transparency, it questioned the climbing cost for oil projects in the Stabroek Block.

The group reasoned, “In 2018, Dr. Jan Mangal and others, using the media, raised concerns about the US$4.4 billion in capital cost for Liza Phase 1. As a result that figure was slashed by US$700 million, see here. After all the revisions, Liza Phase 1 went down from US$4.4 billion in capital cost to US$3.5 billion. Thus, Liza Phase 1 was inflated by 25%. No reduction has happened with subsequent oil field development projects.”

Given that the auditor of Exxon’s US$7.3B costs had said a forensic audit was not conducted but rather a cost recovery audit, the group said it believe a more thorough review of the oil company is necessary.

It was Financial Analyst and Certified Accountant, Floyd Haynes who said that the audit of costs incurred by ExxonMobil in the Stabroek Block was not a forensic audit or a witch hunt.

Haynes 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 said, contrarily, a cost recovery audit of ExxonMobil’s bills was done pursuant to the parameters of the 2016 Production Share Agreement (PSA) governing the Stabroek Block.

OGGN said since there was no reduction in project costs over the years, despite the company gaining experience on navigating the local offshore operations, a forensic audit of the US$55 billion in capital cost might uncover “significantly inflated numbers”.

It urged the government to ensure Exxon provides more information to explain the discrepancies between the capital cost and break-even cost across the 6 projects. Finally, OGGN said the Government of Guyana needs to demand more oversight in the process leading to the commissioning of new Floating Production Storage and Offloading vessels (FPSOs).

OGGN in a previous statement voiced its support for a full-fledged forensic audit of Exxon’s expenses incurred between 2018 and 2020. It said such a review should also be required for all subsequent years.

Audit, expenses, ExxonMobil, oil, Transparency

Latest News

OGGN calls for greater transparency in future audits of ExxonMobil’s US$46 billion expenses

Related

Similar Articles

The Glenn Lall Show | November, 11th, 2024

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

Guyana Beverage Inc. on board with Petra to host 8th Annual Girls U11...

GFF launches NAMILCO/Maid Marian Wheat Up...

Semi’s bowls off tomorrow with...

NO SURPRISE!!

More support for Project “Cricket Gear for...

Guyana to participate at 2024 FIBA 3×3...

Features/Columnists

Poor Power Planning (PPP)

Rising Gun Crimes in the Caribbean: Urgent Action required by all

A Trump victory and me

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]

OGGN calls for greater transparency in future audits of ExxonMobil’s US$46 billion expenses

Share this:

Related

Similar Articles

The Glenn Lall Show | November, 11th, 2024

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

Features/Columnists

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]