The PPP/C Government has finally found a local consortium to work alongside the foreign company that would be selected to audit ExxonMobil’s multibillion dollar exploration and development bills covering the period 1999 to 2017. This was disclosed by Vice President, Dr. Bharrat Jagdeo during a press conference on Thursday.
He said, “…We are hoping that after the 2017 audit is done that locals would have all the capacity to do future audits and this is separate from the audits the Guyana Revenue Authority (GRA) does for tax purposes. This other audit is to ensure reasonableness and fairness in the expenses and to protect our interest as to what is charged against cost oil.”
The Vice President added, “I have raised it directly with ExxonMobil as well and I raised the matter about the two-year deadline (for the State to conduct the audit) … if they press that we will have to reopen the entire PSA (Production Sharing Agreement) and I don’t think they want that to happen so we have gone out to tender for a foreign company.”
The cost recovery audits to be conducted are to be executed in two parts. One audit covers ExxonMobil’s US$460M pre-contract costs in the Stabroek Block from 1999 to 2015. The second audit covers costs from the time of discovery to the sanctioning of activities for the first and second projects (Liza Phase One and Liza Phase Two) totalling over US$9B.
The audit of the pre-contract costs was initially started in 2019 after being awarded to British firm, IHS Markit. The contract cost at that time was US$300,000. Natural Resources Minister, Vickram Bharrat recently told the House that the audit is incomplete and would have to be redone given the alarming state it was found in. He said, “The Government of Guyana, when we took office was alarmed at the limited work done in this regard by the previous administration and immediately commenced with international consultants and local agencies to have a number of shortcomings addressed.”
Minister Bharrat added, “Currently, the government is working to answer every questionable detail with the operator and the auditor to ensure that all expenditures are justifiable and accounted for as per the terms of the agreement.”
He further noted that the government has ensured that the cost of the auditing process was catered for in the 2021 budget which amounted to US$250,000. This would bring the overall costs for the audit of the US$460M bill to US$550,000.
As for the second audit of Exxon’s post 2015 costs, a tender was issued last year but subsequently scrapped as the government felt enough local content was not present. Jagdeo says this time around, the administration is comfortable with the number of local accounting firms it has been able to band together so that they can learn as much as possible from their foreign counterpart.
