Cabinet to approve contract for 3rd cost oil audit soon – VP

The Guyana Government is expected to soon greenlight the contract for the third cost oil audit of ExxonMobil’s expenses, covering the 2021 to 2023 period.
This is according to Vice President Dr. Bharrat Jagdeo at his last press conference, who disclosed that the contract for the third audit will be before Cabinet by next week for its approval.
“So, the [contract for the third] audit was supposed to go to Cabinet maybe next week… I found out and the audit will go to the Cabinet for approval,” Jagdeo said last week.
Back in August, Natural Resources Minister, Vickram Bharrat, had told reporters at a press conference that the government’s intention is to have the contract go to a local consortium, in partnership with international companies.
“We’re well on course to sign that (contract)… Again, we’re looking at the same model (as the second audit) where we can have the local consortium partner with international companies or a company. So, we can build capacity,” Bharrat noted.
The contract for the third cost oil audit for the 2021 to 2023 period was tendered earlier this year. When the bids were opened in March at the National Procurement and Tender Administration Board (NPTAB) in Georgetown, it was revealed that Guyanese companies did indeed throw their hats in the race.
VHE Consulting – the same Guyanese consortium that did the second audit (2018 to 2020) – 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 is a joint venture of local Guyanese firm, N.Sookhai & Company and the Nigeria-based Infoworks Solutions Ltd.
Bharrat meanwhile had hit back at concerns that have been expressed regarding the findings in the 2018-2020 audit done by a consortium of local and foreign audit firms, that some costs had been overstated.
Guyanese firms Ramdihal and Haynes Chartered Accounting, and Professional Services Firm Vitality Accounting and Consultancy Inc., and Eclisar Financial & Professional Services had partnered with Oklahoma-based Martindale Consultants Inc. and the Swiss technical company SGS to conduct that audit.
However, while there had been criticisms that the government seemed not to be taking any action on the findings, the minister had explained that the government had to await the final report before any action could be taken.
“The purpose of the audit is to look at whether Exxon is using revenue in the Canje and Kaieteur block, but is being added to the Stabroek cost bank. In fact, rather than carrying negative statements, the auditors should be commended for finding these inaccuracies, of seeing expenses in the Canje and Kaieteur block, under the Stabroek cost bank.”
“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. It simply means we’ll take that cost out of the cost bank, before any final report is produced. There is no way the government will accept expenses from Canje and Kaieteur, in the Stabroek cost bank,” Bharrat had made clear.
The Guyana Revenue Authority (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 government to take certain steps to ensure this was a one-off incident, with VP Jagdeo explaining that GRA would be checking previous invoices to see whether this was a one-off occurrence.
“We’re now ensuring that 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 back in May.
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.
And 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. However, Jagdeo had said in May that GRA had proceeded to file legal proceedings over the US$12.1 billion overstatement for the oil well equipment.
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. Government had subsequently declared its intentions to move to arbitration to settle this disputed amount being claimed by the US oil major.