Govt. finally releases ExxonMobil’s audit reports following months-long campaign by KNews

Apr 14, 2024 ExxonMobil, News, Oil & Gas

Kaieteur News – The Government of Guyana (GoG) has finally released the audit reports of ExxonMobil’s expenses, incurred between 1999 to 2017 and 2018 to 2020, respectively, following months of campaigning by Kaieteur News.

Vice President Bharrat Jagdeo on Thursday during his weekly press conference at Freedom House, Robb Street, Georgetown revealed that the reports are now available on the Ministry of Natural Resources’ websites.

See link for first audit report: https://docs.google.com/viewerng/viewer?url=https://nre.gov.gy/wp-content/uploads/2024/04/IHS-Audit-Report-Recommendations-Final.pdf&hl=en

And link to the second audit report: https://nre.gov.gy/2024/04/12/vhes-initial-audit-report-for-the-stabroek-block-cost-recovery-audit-2018-to-2020/

Kaieteur News has been leading calls for the audit reports to be released, along with members of civil society, as well as the political Opposition.

Stakeholders believed that the government was hiding the corrupt actions of the oil companies that were exposed in the audit reports done by a British firm, IHS Markit followed by the second audit conducted by VHE Consulting for a review of US$1.6B and US$7.3B, respectively.

Notably, the first audit report recommended that the Government of Guyana (GoG) disallow US$214M in costs being claimed by Exxon for the misuse of Guyana’s oil profits and failure to justify expenses.

Meanwhile, the report by VHE Consulting- Ramdihal & Haynes Inc; Eclisar Financial; and Vitality Accounting & Consultancy Inc- also highlighted a number of areas where the oil company misused the country’s oil revenues.

Government has since indicated that it will be heading to arbitration over the questionable US$214M sum, since the operator is refusing to accept the audit findings.

In the meantime, the process is still ongoing between the Guyana Revenue Authority (GRA) and Exxon on the findings of the second audit.

It must be noted that the 2016 Petroleum Agreement signed by the former government allows ExxonMobil to deduct disputed costs. In fact, the contract is designed to allow the company to spend Guyana’s oil money which is later verified by auditors.

Annex ‘C’ of the PSA at Section 1.5 (b) outlines the procedures of an audit and rights of the government; it is explained: “…In the event that an audit claim by the Minister is not settled to the Minister’s satisfaction by the Contractor’s reply as provided for above, the Contractor shall be entitled to recover any disputed amounts pending final resolution of the claim…”

The same Section goes on to note that upon resolution of the claim, the Minister shall be repaid with interest. The contract states: “…any subsequent adjustments in the Minister’s share of Profit Oil following resolution of the claim shall be repaid with interest, at the Agreed Interest Rate as a first claim from Contractor’s share of future Profit Oil. In the event that the Contractor’s share of Profit Oil is insufficient to provide for the Minister’s extra entitlement including interest, the Contractor shall promptly make an equivalent payment in United States dollars to the Minister.”

Based on the agreement, Guyana can conduct an audit within two years from the end of each calendar year. At the conclusion of the process, the Contractor must be furnished with the report and its findings within 60 days to provide a response. The response from Exxon will detail its objection or acceptance of the audit claim, along with explanations thereof. The contract also allows the subject Minister to conduct further investigations within 60 days of receiving the Contractor’s response.

It must be noted that the PSA makes it clear at Section 1.5 (b) that: “…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.” Article 26 of the contract sets out the conditions as it relates to arbitration.

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campaign, ExxonMobil, Georgetown, Government, Kaieteur News

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