Int’l firms dominate bids to audit Exxon’s cost oil claims

– Guyanese firm among 5 vying for contract

International firms have dominated bids to audit oil giant ExxonMobil’s cost oil claims for oil production in Guyana. This was evident when the tender documents were opened last week at the National Procurement and Tender Administration Board (NPTAB) in the Ministry of Finance.
Based on the bids that were opened, four international audit firms submitted bids for the project – 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 that was established in 2012 and was founded by Managing Director Azzar Haniff. All companies vying for the contract submitted financial proposals.
In the case of Bayphase, the British company has experience working in Guyana. Under the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government, the Energy Department contracted Bayphase to conduct a review of Exxon’s Field Development Plan (FDP) for the Payara oil development in December of 2019.
The review was completed but approval of the FDP was delayed in the wake of the controversies that followed the March 2, 2020 elections. It wasn’t until after the People’s Progressive Party (PPP) entered office last year that action could be taken.
A team of consultants led by former Alberta Premier Allison Redford had conducted a review of Bayphase’s work, at the end of which Government granted approval of the FDP. Exxon is currently conducting developmental works on Payara, which will be its third development in Guyana’s waters.
The work that the eventual contractor will do to audit Exxon’s cost oil claims will be critical to ensuring that Guyana does not lose out on millions in oil revenues. Back in February, Vice President Bharrat Jagdeo had said that Government is gearing up to facilitate an audit into Exxon’s cost oil claims covering the period of 2017 and 2020.
There is a pre contract cost of US$460.2 million that is referenced in Annex C of the Production Sharing Agreement (PSA) Guyana signed with Exxon. According to the contract, the 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 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. The former Government has received much criticism for agreeing to these costs without an audit being done.
The former Government had contracted a company, British consultancy firm IHS Markit, at a cost of US$300,000 ($62.6 million) in 2019. The contract had to be extended in May of 2020 without cost, owing to the COVID-19 pandemic. At the time, former Energy Department Head, Dr Mark Bynoe had said that this was due primarily to flight restrictions.
IHS Markit is the product of a 2016 merger between two companies, United States (US)-based IHS and London-based Markit. Its data and information services business caters to industries such as automotive, energy, financial services, defence and maritime.
The company is no stranger to Guyana’s oil sector, having published a number of write-ups and analyses on Guyana’s efforts to develop its capacity. This includes “Guyana’s deepwater areas will remain competitive, despite changes to fiscal terms (IHS Markit, 2018)” and “How activity in the Guyana mini basin is booming with five exciting discoveries since 2015 (IHS Markit, 2017)”.