New firm to start post-2017 cost oil audit in weeks – VP

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Vice President Dr Bharrat Jagdeo

A new company will start the audit of the post-2017 cost oil incurred by ExxonMobil in the Stabroek Block in a matter of weeks, with Vice President Bharrat Jagdeo revealing that negotiations surrounding this audit have been completed.

During a recent press conference, Jagdeo explained that the Government had some disagreements over expenditure in the audit up to 2017. According to him, a process is ongoing that is seeking to resolve those disagreements. But in the meantime, the post-2017 audit will move forward.

“We then went out to tender and we wanted a local group to be part of the audit for the future. I gather the bid came in a bit high. The negotiations have been completed. So, in a matter of weeks, the new company will start the audit from 2017 to 2020… the contract should be out shortly,” Jagdeo explained.

When it comes to the Guyana Revenue Authority (GRA), Jagdeo explained that the agency is building its capacity for auditing cost oil claims from oil companies. Among the steps the Government has taken to help GRA along its way, is having Finance Minister, Dr Ashni Singh meet with stakeholders to arrange training. Additionally, GRA will get funding to upgrade its capacity.

“What is going on is GRA is building its own capability and by including, for the first time, Guyanese on this audit… they were claiming Guyanese don’t have the expertise. So now we’ll be able to have Guyanese companies building the expertise, auditing oil and gas expenditure.”

“Third, we have asked Minister Singh to meet with the insurance association of Guyana, so that we can fund training for all the members. Accountants and auditors, that the Government is willing to pay for all the training and upgrades, through the association working with the Ministry, so we can upgrade national capability.”

In addition to financial audits, Jagdeo noted the importance of performance audits. According to him, it is important that the Audit Office of Guyana have auditors with those capabilities so that they can do those performance audits.

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.

Based on the bids that were opened last year when Government went out to tender to audit the post-2017 cost oil claims, four international audit firms and one local firm had submitted bids for the project.

The international firms were Bayphase Limited of the United Kingdom (UK); Rosa Correia and Associates of Portugal in partnership with Swale House Partners of the United States; Squire Pat, Gaffney Cline and Associates Incorporated of the UK and Calendar Law Firm. The local company was Eclisar Financial and Professional Services.