Disputed US$214M oil costs: ExxonMobil Guyana, GRA still in talks to identify expert – Routledge

ExxonMobil Guyana and the Guyana Revenue Authority (GRA) are still in talks on identifying a sole expert to resolve a dispute over approximately US$214 million in expenses from the 1999-2017 Stabroek Block audit. The “sole expert” is a dispute resolution mechanism outlined in the Production Sharing Agreement, where a mutually agreed-upon expert will be appointed to make a final decision.
President of ExxonMobil Guyana Alistair Routledge on Monday told reporters that the process takes time. “We have been working with the GRA on identifying a sole expert, with whom both parties are comfortable, that is a process that takes a little bit of time, partly because it’s the first time we’ve done this together…it’s not unusual for that to take time, both sides have a view of who might be a suitable sole expert, we make proposals to one another, we review those and then we have further discussion,” he explained. “I think we are getting close, I’m not aware that we have fully aligned on who will be the sole expert but I’m sure that information would be available in the not-too-distant future,” Routledge added.

Disputed cost oil expenses
British company IHS Markit had audited ExxonMobil and its co-venturers for the period 1999 to 2017, had flagged US$214 million in cost oil expenses as disputable. The 2016 Production Sharing Agreement (PSA) signed by the former A Partnership for National Unity+Alliance For Change (APNU/AFC) Government had provided for a sole expert to be given a chance to resolve the controversy.
This clause was activated after the Guyana Government had signalled its intention to head to arbitration with a view of settling the dispute. Based on the 2016 oil contract, Guyana will have to incur the cost of the oil company’s legal fees should the matter go to arbitration. Earlier this year, Routledge had expressed a preference for the figure to be settled on before it reaches the arbitration stage. The audit of cost oil claims is critical to ensuring that Guyana does not lose out on millions in oil revenues. During Monday’s press conference, Routledge emphasised that “at the end of the day what we’re all striving to do is to give confidence that what we are spending, are genuine expenses, that they are appropriate and that we are managing the investments in the country in a wise way.”
He further noted that ExxonMobil Guyana is perhaps the most audited organisation in the country, noting that “we have internal audits, we are audited by our co-venturers who are just as interested as you are that we don’t spend more money than we should do, we have external auditors and then of course, the Government audits us too…we’re very rigorously audited.”

Audits
ExxonMobil has been present in Guyana since 1999, and initiated exploration activities in 2008. According to the provisions of the 2016 PSA, 75 per cent of gross revenue goes to cost oil, while Guyana receives a total of 14.5 per cent from the remaining revenue and royalty, and ExxonMobil earns 10.5 per cent. In order to ensure value for money, the People’s Progressive Party Civic (PPP/C) Government has been auditing ExxonMobil’s cost oil expenses, to ensure that only valid expenses go into the cost bank. In 2019, British firm, IHS Markit, conducted an audit of ExxonMobil Guyana’s cost oil expenses incurred between 1999 and 2017 from its operations in Guyana, and flagged US$214.4 million as questionable costs.
Meanwhile, there are two more oil audits of ExxonMobil’s expenses in Guyana. In the second audit, done by a consortium of local and international firms, VHE Consulting, for the period 2018 to 2020, ExxonMobil has responded to the audit findings. According to Natural Resources Ministry in one of its updates on the matter, VHE is responsible for reviewing this response, as part of its contractual obligations, and that process was ongoing. Moreover, VHE Consulting also won the contract to conduct the third cost oil audit for 2021 to 2023.