Oil Minister mum on whether full audit report of Exxon’s US$7.3B expenses released

Jun 03, 2024 News

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Kaieteur News – Amid growing concerns as to whether the full audit report of ExxonMobil’s US$7.3B expenses has been released, the Minister of Natural Resources, Vickram Bharrat is mum.

The audit report in question was completed by VHE Consulting, a registered partnership between Ramdihal & Haynes Inc; Eclisar Financial; and Vitality Accounting & Consultancy Inc. The local consortium was supported by international firms- SGS and Martindale Consultants. A final report by the auditors was handed to government since April 2023.

Notably, a massive bill amounting to US$7.3B was racked up by the operator of the Stabroek Block, ExxonMobil Guyana, during the review period- 2018 to 2020. This is more than one year of Guyana’s entire national Budget, which is this year pegged at $1.146 trillion or approximately US$5.5B.
Although auditors revealed in the report that ExxonMobil brazenly misused this country’s oil profits to pay for school fees of expats’ children, yoga sessions and puppet shows to name a few, the document lacks information on the key areas that attract higher costs.

An analysis of the report, done by Kaieteur News, when compared with the first audit report completed by a British firm, IHS Markit found that contracts awarded for major expenses such as chemicals used in the operations; costs associated with the rental of supply vessels and drill rigs; subsea umbilical, risers and flowlines (SURF); helicopter charges; laboratory costs and waste treatment management among others have not been included in the report completed by the local consortium.

Minister Bharrat was therefore asked by Kaieteur News to clarify whether the full report has been released to the public. The Minister responded on Thursday saying “It’s online” but did not clarify whether it was the complete document.

This newspaper therefore asked the Minister again to say if the full report was published but did not receive a response. A reminder of the question was sent to Minister Bharrat again on Saturday at 11:17 am. Bharrat read the message an hour later but never responded. Subsequent calls to his mobile phone on Sunday were not answered.

The nation is therefore left in the dark regarding the use of its resources by the oil giant as Vice President Bharrat Jagdeo has excluded himself from the question of what is likely an incomplete report that has been shared with the public.

He was asked on Thursday during his weekly interaction with the media at Freedom House, Georgetown to say whether the full report has been released, however the Chief Policymaker for the sector said he did not review the document.

“I asked them to publish the audit report. It should be the audit report as received from the auditors, that’s the report so that would be the report they would publish, as received from the auditors. I have not checked it personally but I asked them to post it and they have posted it so that should be the report,” Jagdeo excused.

Audit comparison

It must be noted that the first audit report provides readers with a clear understanding of the company’s operations during the review period. For instance, the auditors explained that during the audit period, there were 10 exploration/appraisal wells spudded and drilled in the Stabroek Area.

Drilling related costs recorded against these 10 wells account for US$903 million. A table is also included with details of the rigs used for the drilling operations at the exact wells- (see page 34 of report). No such information is included in the second report.

Notably, the IHS audit also presents the list of contracts reviewed by the audit team; again, the second report does not contain such details.
With regards to SURF plans, the first audit report provided an overview of an analysis done for the Liza Development Plan (see page 43 of report) and details the cost of the infrastructure and related services; again, such information is not reflected in the second report.

As it relates to drillship costs, ExxonMobil was flagged by the British audit firm (see page 49 of report) for single-sourcing the Deep-Water Champion drillship which was contracted from Triton / Transocean at a day rate of $707,620/day; with total contract spend amounting to $87 million. Meanwhile, there is no indication of rates, which Guyana was charged for the rental of drillships for the period 2018-2020.

Previously, Financial Analyst and Certified Accountant, Floyd Haynes while appearing on Kaieteur Radio was questioned about such costs but said while the team reviewed those numbers, he was not allowed to reveal the information.

He explained, “I haven’t been told by my client to discuss this type of stuff so I want to respect the client. Once they ask me to speak on it, I’d be happy to provide (the information).” Haynes noted that, “We have detailed schedules of all of those things. What I can tell you is that those were some areas that we looked at keenly – drilling, mud, all those types (expenses), helicopters and we benchmarked them against industry standards.”

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• Audit, Bharrat, full, mum, Report

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