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Exxon used $323M from oil profits to purchase vehicles used in Kaieteur, Canje operations – Auditors reveal
President, ExxonMobil Guyana Limited, Alistair Routledge
Kaieteur News – The audit team that reviewed ExxonMobil’s US$7.3 billion expenses, incurred between 2018 and 2020, found that the company used $323 million of the revenue generated in the Stabroek Block to purchase vehicles that were used for operations in the Kaieteur and Canje Blocks.
The review of the company’s expenses was conducted by a local consortium, Ramdihal & Haynes Inc; Eclisar Financial; and Vitality Accounting & Consultancy Inc. The group was supported by international firms- SGS and Martindale Consultants.
According to the report completed by the auditors, ExxonMobil Guyana Limited (EMGL)- previously Esso Exploration and Production Guyana Limited (EEPGL)- the operator of the Stabroek Block included in its cost recovery statement 100 percent of the costs for various vehicles.
The auditors, however, determined that the vehicles purchased were used for all of Exxon’s operations, including those outside of the Stabroek Block. Consequently, auditors informed the company that the costs should be allocated across the blocks.
In response to the findings of the auditors, ExxonMobil confirmed that the vehicles charges were deducted from the Stabroek block. The company, however, disagreed that that the vehicle costs should be shared.
Auditors said Exxon “verbally advised that the 100 percent charge to Stabroek was proper because, paraphrasing, the reason the Contractor was in the country was because of Stabroek operations.”
The report highlighted that US$1,617,143.85 in vehicles were purchased during the period 2018 to 2020 from Beharry Automotive LTD, Ideal Autos Inc., and Massy Motors Guyana LTD. This amounts to just over GYD$323 million.
The auditors pointed out that while the major development presently is the Stabroek Block, wells have been drilled in Canje and Kaieteur with additional exploration activities planned. To this end, the team recommended that those blocks should receive an allocation of all costs from which they derive benefit. They suggested that 75 percent of the vehicle costs be allocated to the Stabroek Block and 12.5 percent each to Canje and Kaieteur, considering the expected level of activity in the three blocks over the next few years.
The auditors have requested Exxon to adjust the cost recovery statement for the incorrect allocation of vehicles costs. They pointed out that failure to do so would amount to the Stabroek Block being overcharged for equipment utilized for unrelated operations and activities.
Even though the government of Guyana has deemed the use of Stabroek Block revenues in other blocks ‘illegal’ the company will not be punished.
It was reported that the company illegally utilized the Stabroek Block profits for other purposes in the Kaieteur and Canje Blocks during the review period.
Be that as it may, Vice President Bharrat Jagdeo had said that the contract the oil giant signed with Guyana means that the expenses will not be included in the cost bank for the Stabroek Block.
“I maintain my position that it would be illegal and I repeat that. The audits would have revealed that now and as I said before there will be consequences. If you did unauthorized work you don’t go to jail according to PSA it just doesn’t form part of the cost bank,” the VP said.
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