ExxonMobil completely on board with cost oil audit – Min Bharrat

– delay to ensure local auditors’ involvement

Oil giant ExxonMobil is completely on board when it comes to the cost oil audit that has to be done into its expenses post-2017, even though the timeframe for it has elapsed. This assurance was provided by Natural Resources Minister Vickram Bharrat.

Natural Resources Minister Vickram Bharrat

In an exclusive interview with this publication, Bharrat was asked about the cost oil audit and whether ExxonMobil will be cooperating in getting same done. According to the Minister, however, Exxon is completely on board in this regard and he is also hopeful that the process can be wrapped up in a timely manner.
“Exxon is completely on board with us… we’re hoping we can wrap up the process as quickly as possible so that that process can start,” the Minister explained, adding that notwithstanding what is reported in sections of the media, the Government is very much committed to doing the audit.
He explained that with a Local Content Bill to be laid in the National Assembly and with all the emphasis being placed on making sure Guyanese benefit from the oil industry, having such an important audit without local participation simply was not an option for the Government.
“We went out, (for) expressions of interests from companies to audit the expenses of Exxon. However, in keeping with our Local Content Policy because soon we’ll be tabling the Local Content Bill in the National Assembly. And we cannot do so at a time when we don’t have local companies engaged in such an important activity as an audit. We wouldn’t be building capacity had we gone to an international company again, as opposed to a local company.”
“As you’re aware, we have competent auditors in Guyana. Because I would have engaged several of the auditing companies, separately and together, as instructed by Vice President. And we know we have the capability and the capacity in Guyana. We may lack a little experience in terms of oil and gas,” Minister Bharrat said.
According to the Minister, local companies have the option of partnering with international audit firms in order to carry out the audit. This will not only ensure local participation in the cost oil audit, but also go towards building capacity.
“And that is why Vice President has advised that the local companies coming together can also engage an international company with the requisite technical skill, to enable them to conduct the audit.”
“So, we will go ahead with the audit, as opposed to what is being said in the media that the Government is not interested in the audit and will not do the audit. That is totally not true. We are committed to the audit and the audit will be done,” Minister Bharrat said.
According to Annex C of the Production Sharing Agreement (PSA) Guyana signed with Exxon, pre-contract cost “shall include four hundred and sixty million, two hundred and thirty-seven hundred thousand and nine hundred and eighteen United States Dollars (US$460,237,918) in respect of all such costs incurred under the 1999 Petroleum Agreement prior to the year ended 2015.”
There is an additional sum of approximately US$400 million from 2016 to 2017, which it is believed will also come under the rubric of cost oil. When the People’s Progressive Party/Civic (PPP/C) Government assumed office in 2020, it took over the shepherding of audits for ExxonMobil’s pre-contract and other pre-2017 costs. The pre-contract cost audit was conducted by the UK firm, IHS Markit, which was hired by the previous Administration four years after oil was first discovered offshore.
Based on the bids that were opened earlier this year when Government went out to tender to audit the post-2017 cost oil claims, four international audit firms and one local firm had submitted bids for the project.
The international firms were Bayphase Limited of the United Kingdom (UK), Rosa Correia and Associates of Portugal in partnership with Swale House Partners of the United States and Squire Pat, Gaffney Cline and Associates Incorporated of the UK and Calendar Law Firm. Eclisar Financial and Professional Services, the fifth firm that submitted a bid, is a local company.
Recently, Vice President Jagdeo had said at a press conference that the audits were unable to be completed on Exxon’s post-2017 expenses, due to the lack of local capacity or participation in the audit. However, he had subsequently assured that the audits would be done.