Deadlock over US$214.4M cost oil claim: Govt, ExxonMobil yet to agree on “sole expert” to settle 2019 audit

The Guyana Government and ExxonMobil Guyana Limited (EMGL) have yet to agree on a mutually acceptable sole expert to determine the US$214.4 million cost oil claim flagged during an audit of the company’s expenses incurred between 1999 and 2017.
“We have not yet landed on a sole expert but have discussed the process to ultimately arrive at one,” Vice President and Business Services Manager of EMGL, John Colling, told reporters at a press conference held at the company’s Ogle, East Coast Demerara, headquarters on Tuesday morning.
In 2019, British firm IHS Markit conducted an audit of EMGL’s oil cost expenses incurred between 1999 and 2017 from its operations in Guyana and flagged US$214.4 million as questionable costs. Following its own review, the Guyana Revenue Authority (GRA) – the technical body tasked with advising the Government on audited oil expenses – issued a no-objection in 2023 to the British firm’s recommendation that the cost bank be adjusted by US$214.4 million, a position 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 PSA. A sole expert is an established dispute-resolution mechanism used to resolve disagreements over cost recovery claims.
According to reports, the Government and ExxonMobil are unable to decide on a sole expert to mediate and make a determination on the possible repayment of the sum. Both sides have proposed candidates for the role but have rejected each other’s nominee.
Reports indicate that ExxonMobil’s preferred candidate previously carried out contractual assignments for the company, raising concerns about a potential conflict of interest – something which Colling opted not to comment on.
Instead, he related that “What I can tell you is that as sole experts are considered, they must meet a number of qualifications that are acceptable to both parties, and certainly, objectivity is one of them. So, that is one criterion that we are discussing with the Government as well as relevant experience, which is another key factor… Both parties have comments on each other’s proposals, but I really don’t want to get ahead of the outcome of that process while we’re engaged in those discussions with the Government.”
In March, EMGL President Alistair Routledge indicated that if negotiations to select a sole expert proved unsuccessful, the parties would have to approach the ICC’s International Court of Arbitration to appoint a third-party expert.
The International Court of Arbitration, which was established by the International Chamber of Commerce (ICC), is an institution for the resolution of international commercial and business disputes.
According to the EMGL VP and Business Services Manager on Tuesday, “ExxonMobil Guyana Limited and the Government have looked at different sole experts for potential selection. If we’re unable to arrive at a mutual selection, that can be referred to the ICC to make the selection, which very well may be the next step in the process.”
“I can assure that ExxonMobil Guyana Limited as well as the Government are diligently working to find a sole expert which is acceptable to both parties… We are willing to work with the Government as long as it takes to bring this matter to resolution. I think ultimately all parties would like to move forward.”
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, conducted by a consortium of local and international firms led by VHE Consulting, US$7.2 billion in expenses incurred between 2018 and 2020 was examined. Of this amount, US$65.1 million was not accepted by the Government.
Moreover, the third cost oil audit, also done by VHE Consulting, covering the period 2021 to 2023, was completed and submitted to the Government.