US$214M audit dispute with ExxonM headed for arbitration

Mar 07, 2025 News

…Govt. says not prepared to allocate more time to Exxon

Kaieteur News- The Government of Guyana is still in the process of finalising audits of ExxonMobil’s expenses for the Stabroek Block, covering the periods 1999-2017 and 2018-2020.

US$214M audit dispute with ExxonM headed for arbitration

Vice President, Bharrat Jagdeo

The Ministry of Natural Resources (MNR) provided an update on Thursday, following concerns raised in a Stabroek News article published on March 2, 2025. The first audit, examined US$1.7 billion in expense incurred by the oil company from 1999 to 2017. That audit identified US$214 million as costs that the Government of Guyana should not allow Exxon to charge to the country’s cost bank.

Under the 2016 Production Sharing Agreement (PSA) governing the Stabroek Block, Exxon and its partners Hess and CNOC are allowed to recover 75% to cover cost, while the remaining 25% is considered profit oil and this is shared between Guyana and the oil companies. As such, the audit of the expenses recoverable by oil companies is crucial to ascertain if actual recoverable cost is being billed to the cost bank.

British firm IHS Markit conducted the first audit and presented its findings since 2021, recommending that the government disallows Exxon and its partners from recovering the flagged US$214 million. However, since then the process has been ongoing.

In response to concerns about delays, the ministry clarified that the audit for 1999-2017, flagged US$214,411,994. According to the MNR, this recommendation was accepted by the Guyana Revenue Authority (GRA), and ExxonMobil was informed accordingly.

EMGL President, Alistair Routledge

“This position remains unchanged and clear, and EXXON was so advised,” the ministry said. The ministry further outlined that under Section 1.5(b) of Annex C to the 2016 Stabroek Block Petroleum Agreement, disputes regarding audit findings can be referred to expert determination within 60 days of notification. ExxonMobil Guyana Limited was officially informed of the final position on September 25, 2024, and later requested an extension to May 15, 2025.

“In its capacity as delegated pursuant to Article 6 of the 2016 Stabroek Block Agreement, the GRA furnished a response dated December 11, 2024 to MNR regarding this request, outlining the process required prior to the engagement of a Sole Expert and recommended that in order to afford due process that an extension be granted to January 25, 2025, given the provision of the additional schedules that were not previously provided,” MNR said. With this extension period now passed, GRA has been directed to proceed with the next steps required under the terms of the PSA.

For his part, Vice President Dr. Bharrat Jagdeo stated during his press conference on Thursday afternoon that there is no room for engagement with Exxon and the US$214 million position remains final.

“The only thing the ministry has to do now is to decide how we settle this, it’s either through the prescribed process prescribed by the PSA which could ultimately end up at arbitration. There is no bilaterally negotiation anymore on the $214 million…” he added.

The second audit, covering Exxon’s expenses for 2018 to 2020 and totaling US$7.3 billion, was conducted by the local consortium VHE Consulting, with international support from SGS and Martindale Consultants.

That final report was submitted to Exxon in November 2024, and the company had 60 days to respond. Permanent Secretary of the Ministry of Natural Resources, Joslyn McKenzie, at a press conference in January disclosed that the government had provided additional information requested by Exxon, and that the review process remains ongoing.

Regarding the 2018-2020 audit conducted by VHE, the ministry noted that EMGL had responded to the audit findings and that VHE is currently reviewing Exxon’s responses. This review remains ongoing.

In their statement, the ministry also cautioned against premature public discussions on audits before they are completed, warning that inaccurate or incomplete information could be harmful.

(US$214M audit dispute with ExxonM headed for arbitration)

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Audit, Bharrat Jagdeo, Exxon, Stabroek Block

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