Cost oil audit of ExxonMobil almost complete – lead auditor

0
Natural Resources Minister Vickram Bharrat handing over the audit contract in May of this year to the contractors in the presence of Permanent Secretary Joslyn McKenzie

…draft report to be submitted by next month

Work by an American-Guyanese consortium of auditors, to audit approximately US$7.2 billion in ExxonMobil cost oil claims, is nearing completion, with the head of the consortium saying that a preliminary report could be presented to the Government in the early part of next month.

This was revealed by Professor Floyd Haynes, in an exclusive interview with this publication. The RHVC consortium he leads (Ramdihal and Haynes, Vitality Consulting) and Eclisar Financial & Professional Services (EFP), joined forces for the audit with United States (US) based companies Martindale Consultants Inc, and Squire Paton Boggs, earlier this year.

Work on the audit of fiscal years 2018, 2019 and 2020, started in August. According to Haynes, they have almost completed their field work and will now move into preparing an interim draft report. Once that draft report is submitted, the Government is expected to examine it and provide their feedback.

“We expect to wrap up field work early next week. By the end of next week for sure. Most of it we’re already done. And then we expect to have an interim draft report submitted to the Ministry of Natural Resources, in the first week of December. That is the plan,” Haynes said.

It was explained by Professor Haynes that after they put together the local consortium, they went out and found an international auditor in the form of Martindale, with the requisite experience. According to the Professor, the goal was to work alongside them and learn. It is a goal that Haynes believes was accomplished.

“The goal is to build local capacity, with the idea that over a period of time, we could have the talent here that could take on the audit, on behalf of the Government. The way we went about doing that, we had two of our staff, local guys, embedded in the audit team. They flew to Oklahoma and have been there for six weeks, working side by side alongside Martindale consultants, the lead auditors.”

“Our guys just returned, I think, last week… and going forward, we intend to increase that number. We may be able to accelerate the pace at which that knowledge and skills are transferred. But as of now I think we’re accomplishing those objectives,” Professor Haynes explained.

Fully cooperating

Haynes also emphasised that ExxonMobil was fully cooperative and willing to provide information to the auditors upon request. According to Haynes, the process went smoothly under the circumstances.

“I would say they’ve been extraordinarily cooperative. The process of itself went very smoothly. With these types of things, back and forth. So, in all that I would say it went well. They were forthcoming with information.”

“We had questions. They were willing to provide explanations. Some of the explanations we may or may not have agreed with. But nonetheless they were provided to us. And all of the information we requested, they responded,” he said.

Haynes also cautioned that the cost oil audit was not a witch-hunt. While he assured that they left no stone unturned in their quest for the truth, he called it a mistake to accuse an oil company of inflated costs without first examining their books. As he put it, it is not something that can be litigated on the pages of a newspaper.

“I want to make sure, in fact I think it’s a little reckless for any audit, to go into an audit with a preconceived notion that the party under audit is guilty. It’s just not how it’s done. Unless you’ve looked at the books, examined it in details, no one can arrive at that conclusion,” Professor Haynes said.

The US$751,000 cost recovery audit contract, which covers profit oil from the years 2018, 2019 and 2020, was signed in May of this year in a room full of stakeholders and suppliers, during a workshop on local content. Preceding fiscal years have already been audited.

According to Annex C of the PSA Guyana signed with Exxon, pre-contract costs “shall include four hundred and sixty million, two hundred and thirty-seven hundred thousand and nine hundred and eighteen United States Dollars (US$460,237,918) in respect of all such costs incurred under the 1999 Petroleum Agreement prior to the year ended 2015”.
When the People’s Progressive Party/Civic (PPP/C) Government assumed office in 2020, it took over the shepherding of audits for ExxonMobil’s pre-contract and other pre-2017 costs. The pre-contract cost audit was conducted by the UK firm, IHS Markit, which was hired by the previous Administration four years after oil was first discovered offshore.