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US$214M audit dispute with Exxon to be settled through arbitration or mediation – Jagdeo
Vice President, Dr. Bharrat Jagdeo
Kaieteur News – Vice President Bharrat Jagdeo told the media on Thursday at his weekly press conference that the time for discussions over the US$214M disputed expenses of Exxon has expired and at this point, the provisions within the Production Sharing Agreement (PSA) will be activated to have the issue resolved.
The Stabroek Block PSA under the heading Sole Expert and Arbitration, Article 26:1 states that “The Parties shall make reasonable efforts to resolve amicably all Disputes by negotiation. A notice of the existence of a Dispute shall be given by a Party to another Party in accordance with Article 34. In the event that no agreement is reached within sixty (60) days after the date on which a Party notifies the other that a Dispute exists, or such longer period as specifically agreed by the Parties in writing, any Party shall have the right to have such Dispute determined by arbitration as provided for in this Article 26. Notwithstanding the above, such period of negotiation is not required where the running of this time period may bar access to arbitration.”
Article 26:2 further states that, “Any claim, demand, cause of action, dispute, or controversy arising out of or in connection with this Agreement, including any question regarding its formation, existence, validity, enforceability, performance, termination, or alleged breach (“Dispute”) which cannot be settled amicably by negotiation shall be resolved by arbitration.”
Jagdeo told reporters, “We have to determine that and there is only one way forward basically because they have a…I gather they are sending documents to us now, to address those concerns and I said to the ministry we have long gone past that stage. There was a time period for that this is on the first audit.”
He further stated that “We now have to trigger the provisions under the PSA. Which means some form of a mediated settlement or arbitration. So we have gone past the issue of clarifying between the two parties’ costs. We have a dispute over $214M that should not be part of the cost bank.”
On August 24, 2024, this publication reported that the Government of Guyana has written ExxonMobil for its response to the final audit report for the first audit which shows charges amounting to some US$214M that were not used for activities directly related to exploration and production in the Stabroek Block offshore.
However, Minister of Natural Resources, Vickram Bharrat at his mid-year press conference revealed that the oil company has not yet responded to the inquiries, but there is a timeframe attached for them to do so. He did not specify the timeframe.
The first audit examined expenses incurred by the oil company from 1999-2017.
“In terms of the audits, the first audit as you know that has been well…very much ventilated in the media and elsewhere, we have closed that at the $214 figure, I would have…based on advice we would have written Exxon saying that this is the final report,” Minister Bharrat told reporters.
He explained that while the government is awaiting the oil company’s response to know the next step there is a timeframe attached for them to provide the answers.
“We are awaiting the response. I think there is a time period for that response and then we will take it forward from there, but from the government’s perspective and our position is that the final report is being closed off at the $214 I think $214.6M,” he said.
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