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Exxon math incorrectly inflates fuel costs for support vessels – Auditors Find

Jun 07, 2024 News

Kaieteur News – ExxonMobil Guyana Limited (EMGL) has over the years been rounding off its percentages when mathematically calculating the fuel used by its support vessels.

This practice of rounding off the figures to the closet percent, versus using actual figures has led to the operator overcharging Guyana for fuel it imports to support its operations through the use of support vessels. This was unearthed by auditors VHE Consulting which had been hired by government to scrutinise the expenses already recouped by the EMGL operator in the Stabroek Block as per the provisions of the Production Sharing Agreement (PSA) signed with the company and its consortium partners, Hess Guyana Limited, and China National Offshore Oil Company (CNOOC) back in 2016.

Under the terms of that agreement up to 75 percent of the gross revenues from the block are recoverable, as per the PSA, each month. The auditors in their probe of the consortium’s spending and money recovered between 2018 and 2018 over which there is now dispute found that EMGL included on the Cost Recovery Statement allocated marine vessel and fuel costs coded to Marine Support Vessel (MPV), Marine Supply Vessel (PSV), and Marine Fuel Cost Objects.

According to VHE Consulting finding “in 2020, MPV and PSV charter costs were allocated using unrounded usage percentages, but marine fuel costs were allocated based on percentages rounded to the nearest whole percent.”

The auditors said that the fuel costs should have been allocated precisely the same as the boat costs; that is, using unrounded percentages.  It was found to that, the same metric is used to allocate boat and associated fuel costs, “so the ultimate percentage shares paid by a given property should be the same for both boats and fuel.”

VHE poignantly observed “this is especially true with high-dollar cost pools where fractions of a percentage can mean huge sums; also, rounding down, can result in an operation not sharing any costs even if it used a boat and associated fuel.” According EMGL requested to credit the Cost Recovery Statement for this incorrect allocation of 2022 marine fuel costs, correct the 2021 and 2022 allocations based on unrounded the percentages, and begin using decimalized percentages in order, “to more equitably allocate boat and associated fuel costs.”

 

 

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