ExxonMobil will pay cost oil claims if justified by audit – Bharrat

Minister of Natural Resources Vickram Bharrat

Natural Resources Minister Vickram Bharrat has assured that contrary to reports that have been swirling, Guyana can still reclaim cost oil if needed during the auditing of ExxonMobil’s cost oil claims.

The Minister gave this assurance in the wake of the award of a US$751,000 contract to audit US$9 billion in cost oil from ExxonMobil’s operations in the Stabroek Block. According to Minister Bharrat, there is no truth to the claims that Guyana is out of the timeframe to audit and refute any cost oil claims made.

“There’s speculation that the time has elapsed and we cannot do the audit or we cannot make any claims. But that is not true. We’ve been in constant engagement with the operator. And they are willing to support and be a part of the audit,” Bharrat said.

Additionally, the Minister said during his address on the occasion of the contract signing, that the Government is moving in the direction of having half annual audits. This, he noted, is important for making sure that cost oil audits are current.

“That is why we took the bold initiative to get local companies involved. So that we can move to a stage where we can do year-by-year auditing. And we don’t have to wait until 2022 to do 2018. Or we can even do half-yearly audits.”

“We’re moving to that stage and I think it’s what all Guyanese want. Everybody wants to know that whatever expenses are being incurred that they are true expenses. And we’re not paying for or being charged for something we haven’t incurred.”

Only last week, a contract was signed between a consortium of local auditors and an international company, with the Government of Guyana, to undertake a US$751,000 contract to audit US$9 billion in cost oil from ExxonMobil’s operations in the Stabroek Block.

The cost recovery audit contract, which covers profit oil from the years 2018, 2019 and 2020, was signed in a room full of stakeholders and suppliers, during a workshop on local content. The local auditors include Ramdihal and Haynes Chartered Accounting, as well as Vitality Accounting.

During a press conference in February, Vice President Bharrat Jagdeo had announced that a local consortium of auditors had been identified to partner with whichever company wins the reissued tender for the audit of Exxon’s expenses post-2017.

The Vice President also assured that for those concerned about the elapsed timeframe for the audit of Exxon’s cost oil claims, there is nothing to worry about since the Production Sharing Agreement (PSA) would have to be reviewed if Exxon were to decide not to comply with the audit.

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”.

There is an additional sum of approximately US$400 million from 2016 to 2017, which it is believed will also come under the rubric of cost oil. Meanwhile, the post-2017 sum is believed to be over US$9 billion, inclusive of sanctioning expenses for the Liza Phase One and Two projects.

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.