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Liza wells may run dry before Exxon’s US$28.5 billion audits are completed – Chris Ram
(Kaieteur News) – Despite commissioning three audits of ExxonMobil’s oil expenses, Guyana has yet to complete a single full review, raising concerns that production at the Liza fields could end before the country finalises its scrutiny of billions of dollars in costs.
This is according to attorney, Christopher Ram. In an invited comment, the newspaper columnist who has been keeping a close eye on Guyana’s blossoming petroleum sector said, “Not being cynical but it seems that the productive capacity of Liza One and Liza may run dry before any of the ministerial audit under the 2016 Petroleum Agreement is completed. That is more than just a possibility.”
Attorney-at-Law and Chartered Accountant, Christopher Ram
On Tuesday, this newspaper reported that Liza One and Liza Two have about three more years, at current production rates before the wells run dry.
As such, Ram noted, “The reality is that we are rapidly extracting and selling the country’s first oil while the audit process drags on in secrecy. That is backwards.”
He was keen to point out that audits are supposed to run alongside production, rather than trail behind it after the resource is depleted.
“The Kaieteur News carried a story a few days before Christmas, indicating that between 2021 to 2023, expenditure charged against revenue before any profit share was some US$19.6 billion. This is not Exxon’s oil – it belongs to the people of Guyana. Keeping the accounting and the audits incomplete or hidden is a colossal failure of stewardship,” Ram noted.
He was referring to the third audit of the company’s expenses, conducted by the local consortium VHE Consulting.
It was reported that auditors completed their work since May last year and handed over that report to government. The document has not been released while government has also refused to share the amount flagged as inappropriate by the audit team.
Five months later, in October, Bharrat informed this newspaper that the Guyana Revenue Authority (GRA) was still conducting a technical review of the report and would make the document public after the process was completed. Recently, Bharrat was asked again about the report and directed all questions to the tax agency.
Notably, the (GRA) has not responded to any queries from this newspaper relating to the audit.
Previously, minister Bharrat said he was hesitant to disclose the initial sum that was flagged by the auditors. He explained, “The auditors would flag a figure and then it goes back to the company and the company might be able to produce evidence or receipts for everything so it keeps adjusting all the time so it’s no use I give you a figure and then it might raise questions all around.”
The minister at the time urged that the (GRA) be granted a few more days to complete the process with the oil company. “Remember they would give the company time to provide evidence of spending and so,” he said while assuring that the third audit report will be made public on the website upon completion of the ongoing exchanges between Exxon and the (GRA).
Notably, although the first and second audits have been completed, the country has not recovered a cent from the millions of US-dollars misused by the oil company.
The first audit of Exxon covered the period 1999 to 2017. A British firm, IHS Markit conducted the review of US$1.6B in costs claimed by the operator. It found that US$214M of those expenses were incorrectly charged to Guyana.
Meanwhile, the second audit was also conducted by VHE Consulting. The group was tasked with auditing US$7.3B in costs incurred by Exxon and partners between 2018 and 2020. They found that another US$64M did not belong to the cost bank.
So far, Guyana has not been able to recover any of the disputed sums from the US$28.5B audits conducted.
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