ExxonMobil Guyana Limited which operates the oil-rich Stabroek Block, recently addressed concerns about the controversy surrounding the ongoing audit of its expenses totalling US$1.7B, noting that it acted in good faith. It also noted that the rejection of a large part of its expenses by auditors is a rare instance.
ExxonMobil’s statement comes in wake of a probe that has been ordered by Government into the mishandling of the audit by the Petroleum Unit of the Ministry of Natural Resources. The audit of Exxon’s US$1.7B in expenses incurred from 1999 to 2017 in the Stabroek Block was done by British firm, IHS Markit which flagged some US$214M in questionable expenses.
The Guyana Revenue Authority (GRA) which functions as the government’s advisor on these audits and their findings, recommended to the ministry on August 8, 2023 for the audit to be closed with US$214M as the final figure for dispute. Despite this advice, the unit engaged Exxon in an unauthorized reduction of the costs to US$3M.
It has since been revealed that the matter is under investigation by the Natural Resources Ministry which has committed to scrutinizing the Petroleum Unit’s handling of the audit findings, with subsequent action to be taken by Cabinet.
Vice President, Dr. Bharrat Jagdeo also came to the fore to address the issue at his recent press conference where he affirmed that Exxon’s disputed $214M in expenses will remain the same.
Following the announcement of a probe, Exxon issued a statement emphasizing its commitment to transparency throughout the audit process, which it regards as standard within the oil and gas industry.
Exxon was also keen to note the routine nature of expense audits in the oil and gas sector, conducted by co-venturers and government entities to ensure the validity and appropriateness of costs. The company noted as well that auditors often share draft reports identifying focus areas, a process it is familiar with. The company underlined that, in most instances, very few, if any, expenses are ultimately rejected, showcasing the integrity and quality of their accounting practices.
“The company’s experience suggests that, in most cases, very few, if any, costs are ultimately rejected. This outcome underscores the integrity and quality of ExxonMobil Guyana’s accounting practices,” Exxon said.
Highlighting its cooperative approach, ExxonMobil Guyana pointed out the government’s audit rights as outlined in the Stabroek Petroleum Agreement. The company expressed its dedication to acting in good faith and cooperating fully with the government and their appointed consultants during the cost recovery audit covering the years from 1999 to 2017.
In an effort to maintain transparency, Exxon emphasized that it provided detailed responses and relevant documents to address concerns raised in the draft audit report prepared by the government’s consultant. They now await a formal response from the government and stand ready for further dialogue as needed.
It must also be noted that the Vice President, while acknowledging that the unauthorised engagement should have never taken place, noted that it is unlikely that the investigation and its revelation would affect the arbitration process. He has also said that Exxon would not be included in the probe.
