2019 cost oil audit: Guyana, Exxon could turn to ICC for sole expert section – Routledge 

The Guyana Government and ExxonMobil are yet to decide on a sole expert to oversee the settlement of the US$214.4 million cost oil claim, flagged during an audit of the United States (US)-based oil company’s expenses between 1999 and 2017. Country Manager Alistair Routledge said that if the ongoing negotiations reach a stalemate, the parties would have to approach the International Chamber of Commerce (ICC) International Court of Arbitration to identify a third-party expert.
“We would agree to go to the ICC, and they would appoint a sole expert. That is the next step. So, if we can’t agree, then we have a third party identify that sole expert, and then we move forward with that sole expert,” Routledge told reporters during a press conference last week at the ExxonMobil Guyana Limited (EMGL) headquarters at Ogle, East Coast Demerara. The International Court of Arbitration, which was established by the ICC, is an institution for the resolution of international commercial and business disputes.
In 2019, British firm IHS Markit conducted an audit of EMGL’s cost oil expenses incurred between 1999 and 2017 from its operations in Guyana and flagged US$214.4 million as questionable costs. Following months of its own review, the Guyana Revenue Authority (GRA) – the technical body tasked with advising the Government on the audited oil expenses – had given it no objection since 2023 to the British firm’s recommendation to adjust the cost bank by US$214.4 million, something which was supported by the Government.
Section 1.5(b) of Annex C to the 2016 Stabroek Block Petroleum Agreement, signed between ExxonMobil and the then A Partnership for National Unity/Alliance For Change (APNU/AFC) Government, allows for the submission of disputes concerning the audit to expert determination within sixty days of being informed of the final position. Since last year, the Government had indicated that it would initiate the process to recover the disputed cost oil claim. Both sides subsequently agreed to activate the provision for a sole expert, as enshrined in the Production Sharing Agreement (PSA).
The sole expert is an established dispute resolution mechanism, which can resolve disagreements over the cost-recovery claims. The Government has submitted multiple nominees for the sole expert. ExxonMobil, acting on behalf of the co-venturers, has until May 31, 2025, to provide its response. But according to reports, the Government and ExxonMobil are unable to decide on an expert to mediate and make a determination on the possible repayment of the sum. Both sides have selected their own candidates to be the sole expert and have rejected each other’s choice. Based on reports, the candidate identified by Exxon has previously carried out contractual assignments for the oil company, thus raising concerns of conflict of interest.

Still engaged
Nevertheless, the EMGL President explained during last Thursday’s press conference that the company and the GRA, which is representing the Government, are still engaged in the selection process. “That process is ongoing, and we expect to have one selected soon,” Routledge stated, adding that there could be additional candidates presented by the two sides even before they head to the ICC. According to the EMGL president, while there is no deadline set for the selection of the sole expert, it is important for both sides to have confidence in whichever third-party expert is landed on.
“Depending on which steps are followed or taken, then it can take a little longer. We also mutually agreed, between the GRA and ourselves, on where it makes sense to take more time to ensure we are doing the right reviews. Because part of this process is each side providing candidates they nominate as experts. We did not want to put undue pressure on the review of the candidates. Each side is comfortable when we land on the third-party expert. There should be no concern that they are acting in the interest of all parties.
“One way or another we’re going to get to a sole expert. But what I would say is the discussions have been had with the right approach, both sides wanting to make sure that they understand the credentials of the people and the organisations being proposed and also that they don’t have any conflicts of interest. It’s extremely important, I think, to both parties that we are comfortable ultimately with whoever it is that is the sole expert,” the EMGL President stated.
In March last year, Guyana’s Vice President (VP) Dr Bharrat Jagdeo had stated that this process initiated by the GRA could eventually lead to arbitration. Meanwhile, even as the two sides are attempting to settle this first audit, there are two more oil audits of Exxon’s expenses in Guyana. In the second audit, done by a consortium of local and international firms, VHE Consulting, some US$7.2 billion in expenses incurred between 2018 and 2020 were examined. Of this amount, US$65.1 million was not accepted by the Government.
Routledge told reporters during Thursday’s press conference that Exxon has reviewed and provided feedback on those findings and is now awaiting another round of feedback on its comments submitted. “I think what is happening is the process is working in the sense that audits are taking place, and questions are being raised, and we’re going back and revisiting the data and the information we’ve supplied to make sure it’s clear. We have found certain areas; we’ve made adjustments, but those have been de minimis, really,” the EMGL head stated.
Moreover, the third cost oil audit, covering the period 2021 to 2023, was completed and submitted to the Government. The GRA has been reviewing that report.