Latest update November 21st, 2024 1:00 AM
‘Govt. will not accept Exxon charging Stabroek Block account for Kaieteur, Canje expenses’- Oil Minister
Kaieteur News – In the second audit where the expenses were examined for the period 2018-2020 it was discovered that operator of the Stabroek Block ExxonMobil charged expenses incurred in the Canje and Kaieteur Block to the Stabroek cost bank.
Minister of Natural Resources Vickram Bharrat.
But Minister of Natural Resources Vickram Bharrat said the administration will not accept it. He made it clear at his mid-year press conference on Wednesday that the government will not accept Exxon charging Stabroek for expenses incurred elsewhere.
He made mention that the public and the media are of the opinion that the government is not proactive in having the issue rectified but “To say that we are not doing anything about it is unfair, because there is no final report on the second audit as yet. There is no final report as yet. So it simply means we will take that cost out of the cost bank before any final report is produced. There is no way the government is going to accept expenses from Canje and Kaieteur in the Stabroek coat bank. So that should be a non issue.”
Bharrat reminded the media that it was the government who initiated the audits in the first place to see if the expenses claimed by Exxon were accounted for and charged to the correct account. “The purpose of the audit is to look at these issues, whether Exxon is using revenue in the Canje and Kaieteur Block but (it) is being added to the Stabroek cost bank. That is one of the purpose of the audit and we should…in fact rather than carrying negative released or statements of this the auditors should be commended for actually finding these inaccuracies and inconsistencies of seeing expenses incurred in the Canje and Kaieteur Block under the Stabroek cost bank.,” he said.
Praising the auditors for a job well done he added, “So that by itself means that auditors are doing what they are supposed to do, ensure that there is no additional expenses outside of the Stabroek Block that goes into the Stabroek cost bank, so I think they should be commended.”
This publication reported previously that 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. 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. Even though government has said that this use of the Stabroek Block funds to offset expenses in the other blocks is illegal, Exxon will not be facing any penalties of any sort. Jagdeo had said at a previous press conference 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 unauthorised 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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