Govt aiming for quarterly cost oil audits – Bharrat

…says audits also have to be conducted on blocks outside of Stabroek

The Government is aiming to build local capacity to the point where local companies can conduct half yearly or even quarterly audits of cost oil claims, ensuring that up to date audits are done on international oil companies exploring in Guyana’s water.
This is according to Natural Resources Minister Vickram Bharrat. He recently told the National Assembly during the examination of his Ministry’s budget that the collaboration a local consortium of auditors will be doing with a foreign company to audit Exxon’s post-2017 cost oil claims, will be important to building capacity for future audits.
In fact, the Minister explained that this international company will have to abide by the Terms of Reference (ToR) of the contract to train the local firms and transfer skills to them. According to him, four leading local audit firms have been identified for this task.
“So it’s not just training or doing the audit, it is also building capacity in our local auditors in Guyana. So that sometime in the future, we can have local firms conducting a full audit of expenses in the oil and gas sector. That is the idea behind this,” Minister Bharrat said.

“It will also allow us to save revenue and have up to date audits of the records of expenses. And we don’t have to wait until 2018 to audit from 1999 to 2017 or wait until 2022 to audit 2018 to 2020 and we can bring it up to date, to where we can even do quarterly or half yearly audits. Because we have the local capacity in Guyana.”

Audit
When it comes to the actual audit of ExxonMobil’s cost oil claims for the Stabroek Block, Bharrat emphasized that the Government is committed to auditing the company this year, for the preceding years of 2018 to 2020.
“We are committed to ensuring we start the audit in 2022, for the years 2018 to 2020. And Mr Speaker, I want to put that issue to rest. I want to say clearly, that the Government of Guyana is committed to ensuring that we conduct this audit. Because it is our responsibility, being a responsible Government, to ensure that we audit the expenses of oil exploration in the oil sector.”
“So, we are committed to ensuring that we do this. But everyone knows there has been a slight delay in starting the process. And we also know it is because we want to ensure we build local capacity. We cannot bring a Local Content Bill to the National Assembly for providing food and engineering and welding and fabrication and then we outsource totally, the auditing of our oil expenses,” Bharrat said.
According to Annex C of the PSA Guyana signed with Exxon, pre-contract costs “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. Meanwhile, the post-2017 sum is believed to be over US$9 billion, inclusive of sanctioning expenses for the Liza Phase One and Two projects.

Other blocks
While the Stabroek Block has received much attention for the over 25 oil finds ExxonMobil has made in the block, there are a number of other blocks where oil exploration is actively being conducted. In fact, Exxon is operational in two of these other blocks.
Minister Bharrat explained that the Government is also committed to conducting the audits of the remaining seven blocks, including the Corentyne, Kaieteur, Orinduik and Kanuku Blocks. Bharrat explained that with the packed work programme in these blocks, work has to start on auditing their exploration activities.
“Because based on the work programme we have seen from the oil companies and we’ve been working with them almost on a daily basis, the work programme indicates that we will have significant exploration activities over the next two to three years,” he also explained. (G3)