Govt still verifying findings with Exxon in 2nd cost oil audit – Jagdeo

The second cost oil audit of ExxonMobil’s 2018 to 2020 expenses remain an open book, as the government is still in talks with the oil giant to clarify certain points raised by the auditors, comprising a consortium of local and international firms.
This was clarified by Vice President Bharrat Jagdeo, during his press conference last week while giving an update on the cost oil audits.
There have been three so far. With regard to the second one, covering the years 2018 to 2020, Jagdeo explained that the government is still verifying certain details in the audit.

“The second one, they still are writing Exxon and awaiting responses on a lot of the issues that you have serialised in the Kaieteur News. And I hope you acknowledge that it was we who released both audits. So, they’re no longer secret documents. The audits have been released,” Jagdeo said.
This second audit was carried out by a consortium of local and international firms. Guyanese firms Ramdihal and Haynes Chartered Accounting, Vitality Accounting and Consultancy, and Eclisar had partnered with Oklahoma-based Martindale Consultants and Swizterland-based SGS to conduct the audit.
When it comes to the first audit, Jagdeo said that this audit should have been closed by now, since the government has already determined it will go to arbitration with Exxon.
“The last conversation I had on this matter was that we need to close the first audit. Formally say (it is closed). So, I have to find out if that was done. And it should have been done. Because that was about three weeks ago that they had to write and say, we have differences of opinion over US$214 million. So that letter, closing it with Exxon.”
“So, there’s no room for negotiation anymore. That is clear. Then you trigger the procedures according to the PSA. They try to meet, to see through maybe a mediator to see if you can close the gap. And if not, you go to full arbitration. So that should have been done,” the Vice President added.
In 2019, British firm IHS Markit conducted an audit of ExxonMobil’s cost oil expenses racked up between 1999 and 2017 from its operations in Guyana and flagged US$214.4 million as questionable costs. Following months of its own review, the Guyana Revenue Authority (GRA) – the technical body tasked with advising the Government on the audited oil expenses – supported the US$214.4 million disputed sum.
Based on the 2016 oil contract that was signed between ExxonMobil and the then A Partnership for National Unity/Alliance For Change (APNU/AFC) Government, Guyana will have to incur the cost of the oil company’s legal fees should the matter go to arbitration.
The audit of cost oil claims is critical to ensuring that Guyana does not lose out on millions in oil revenues. ExxonMobil’s pre-contract costs were inherited by the current Government when it entered office in 2020. US$460 million in pre-contract costs were already written into the 2016 Production Sharing Agreement (PSA).
The People’s Progressive Party/Civic (PPP/C) Government has expressed optimistically as they can conclude, by this year-end, the three cost oil audits spanning the years 1999 to 2023, bringing all audits of ExxonMobil’s cost oil expenses to a current status. In addition to the 1999-2017 and the 2018-2020 audits, the 2021 to 2023 audit also has to be completed. (G3)