Vice President Dr Bharrat Jagdeo has disclosed that the second cost oil audit of ExxonMobil’s expenses, covering the 2018 to 2020 period, has been completed.
“The Head of GRA (Guyana Revenue Authority, Godfrey Statia) said to me last week, that they did complete it and now, they have to write Exxon about it,” Jagdeo told reporters at a press conference on Thursday.
The Vice President expressed his disappointment with the delays in completing this audit of the US oil major’s expenses in its Guyana operations.
“I was very disappointed with the finalisation of the second audit internally before it goes to Exxon because there was a football, like moving back and forth between the (Natural Resources) Ministry and GRA… So, you do have some of the sloth in the system where people don’t move fast enough but we’re dealing with it on a routine basis,” the VP posited.
This second audit was carried out by a consortium of local and international firms, VHE Consulting, which is expected to release its findings soon.
Vice President Dr Bharrat Jagdeo
Guyanese firms Vitality Accounting and Consultancy, Ramdihal and Haynes Chartered Accounting, and Eclisar Financial & Professional Services had partnered with Oklahoma-based Martindale Consultants and Switzerland-based SGS to conduct the audit.
VHE Consulting has since been awarded the contract to conduct the third cost oil audit into Exxon’s expenses for the period, 2021 to 2023.
The $312.6 million contract for the third cost oil audit was tendered earlier this year. When the bids were opened in March at NPTAB in Georgetown, it was revealed that the three bids came from a mixture of Guyanese and foreign companies.
VHE Consulting had submitted a bid to the tune of $229 million. The second bid came from London-based Grant Thornton UK LLP and PFK Barcellos Narine & Co, which did not have a bid price at the time. Priced at $202.8 million, the third bid was a joint venture of local Guyanese firms, N. Sookhai & Company and the Nigeria-based Infoworks Solutions Ltd.
However, when VHE was awarded the contract for the third audit, there were concerns expressed since the consortium had not completed the second audit as yet.
Earlier this year, GRA had flagged inaccuracies in declarations made by a Trinidadian logistics company that acted as the broker on oil well equipment imported for ExxonMobil. It was reported that the company, in submitting the declaration, had listed US$4.4 million worth of oil well equipment as a whopping US$12.1 billion.
This revelation had prompted the Government to take certain steps to ensure this was a one-off incident, with VP Jagdeo explaining back in May that GRA would be checking previous invoices to see whether this was a one-off occurrence.
“Before we finalise any of the [cost oil] audits – the second audit, the GRA will go back and check all the back-invoices for the past several years, to see that there’s been no overstatement on any of these invoices. This is a serious matter, and we’re taking it seriously,” the Vice President had said.
Meanwhile, Natural Resources Minister, Vickram Bharrat, in August had hit back at concerns that have been expressed regarding those findings of overstated costs. He had explained that the Government was awaiting the final report before any action could be taken.
“Rather than carrying negative statements, the auditors should be commended for finding these inaccuracies… And to say that we are not doing anything about it is unfair, because there is no final report on the second audit as yet,” Bharrat had made clear.
ExxonMobil Guyana, for its part, had claimed that it was a typographical error that caused the worth of the equipment to be overstated in November 2023. Further, the oil company had said that it had cut ties with the supplier and had beefed up its internal systems.
In response to a March 18, 2024 letter from GRA, asking it to show cause why proceedings should not be instituted against it, Exxon had committed to working along with GRA to address any further concerns on the matter.
When it comes to the first cost oil audit, British firm IHS Markit had flagged US$214.4 million as questionable costs of ExxonMobil’s expenses incurred between 1999 and 2017 from its operations in Guyana.
Following months of review, GRA – the technical body tasked with advising the Government on the audited oil expenses – had supported the dispute of the US$214.4 million, as flagged by IHS Markit. The Government had subsequently declared its intentions to move to arbitration to settle this disputed amount being claimed by the US oil major.
But according to ExxonMobil Guyana President Alistair Routledge, arbitration is a last resort.
During a recent press conference, Routledge said, “I don’t have any intent to call on an arbitration. I don’t think that’s the right way to get to a resolution. But at the end of the day, it’s laid out in the petroleum agreement… Ultimately the next, logical step would be to involve an independent expert. If we can’t resolve that way there is the arbitration provision. But arbitration is generally a last resort and quite expensive process.”
Nevertheless, the ExxonMobil Guyana President company is still in talks with GRA on these audits.
“We are continuing the work on the cost audits. We’re still in discussion, and exchange of information with the GRA as the appointed, authorised entity to work with us on the audit. Be it the first, second or indeed the approaching third audit of the Stabroek cost bank,” he said.
