Exxon caught using Guyana’s oil profits to monitor newspapers

May 14, 2024 ExxonMobil, News, Oil & Gas

…auditors instruct company to return

Kaieteur News – ExxonMobil was caught by auditors spending Guyana’s oil profits to pay for the monitoring of newspapers and media between the period 2018 and 2020.

A review of the company’s expenses during the period found that a total of US$2,465,061.62 was claimed by Exxon for its Public Affairs Program. These costs, according to the auditors are not related to petroleum operations and should therefore not be billed to the country’s oil.

According to the audit report, Exxon used the sum stated above on media messaging; stakeholder relations, issues management; recording, editing, and voice talent for public service messages on Guyana’s Sovereign Wealth Fund; hosting visit for Shell Beach Outreach Program including catering and boat and ground transportation; Liza Destiny Arrival Commemoratory Event; branded drawstring sports packs and bottles; media monitoring services and newspapers as well as brochures for Exxon.

Additionally, the oil company used Guyana’s profits to pay for support given to the Center for Strategic & International Studies (CSIS) and Public and Governmental Affairs (P&GA) employee / expatriate labor and associated expenses.

The auditors however noted, “A cost must be carried out for, or in connection with, production operations for the cost to be recoverable. These costs were not directly for production operations. The Contractor acknowledged that the costs are not recoverable because it reversed more than one million dollars charged into the Cost Object, such as a report on Guyana emigration, sponsorships, advertising, goodwill, media, and other similar costs. The remaining costs must also be reversed.”

Notably, Exxon agreed to return US$2,373,712 credit to the Cost Recovery Statement for “Public Affairs” costs not chargeable, but denied the remaining $91,349 credit. For its part, the company said, “The remaining exception is in conflict with the generally accepted customs and practices of the international petroleum industry…Employee related expenses including periodic staff events, staff salary and business cards are typical in any organization and common practice in the international oil and gas industry in connection with the exploration and production of petroleum.”

The audit team however maintained that the costs submitted by the contractor were not related to petroleum operations as outlined in the 2016 Production Sharing Agreement (PSA) and therefore requested that the costs be returned.

The Government of Guyana (GoG) contracted Ramdihal & Haynes Inc., Eclisar Financial, and Vitality Accounting & Consultancy Inc., along with the international firm Martindale Consultants to review the company’s US$7.3B expenses incurred between the period 2018 to 2020 during which Exxon was caught using Guyana’s oil money to cover expenses related to two other blocks—Kaieteur and Canje.

In the first instance, the report states that Exxon used Stabroek Block revenues to cover a permit fee for a Kaieteur Geotechnical and Geophysical Survey. It also included its cost recovery statement for the Stabroek Block, 100% of the costs associated with an Emergency Response Study for oil spills from Guyana wells. Auditors said the Stabroek Block revenues should not have been used to cover 100 percent of this activity since the study looked at wells in the Kaieteur and Canje blocks.

In the third case, auditors said Exxon charged the Stabroek Block’s producing projects, 100 percent of the cost for various vehicles to support its operations not limited to Stabroek.

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

During the period, the oil company was also flagged by the auditors for sporting Guyana’s profits on staff parties, social media ads and trips for ex-government officials and paying some US$10.3M for private drivers as well as US$2.2M in school fees for expats’ children.

Auditors also found that Guyana’s oil profits were used between 2018 and 2020 to make films and documentaries about Exxon’s unprecedented success here; pay for puppet shows and go-kart rentals for expats and families, Christmas cook-out, Zumba and Yoga classes for expats and holiday gift vouchers for security guards, escorts for Executives and security for expats’ family fun day.

Audit, Monitor, newspapers, oil, profits

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