Local auditors, int’l firm ink US$700,000 cost recovery audit contract for Stabroek Block

…training for local auditors, capacity building part of package

A contract has been signed between a consortium of local auditors and an international company, with the Government of Guyana, to undertake a US$751,000 contract to audit US$9 billion in cost oil from ExxonMobil’s operations in the Stabroek Block.

Natural Resources Minister Vickram Bharrat (second left) following the signing of the cost recovery audit contract with company and Government officials

The cost recovery audit contract, which covers profit oil from the years 2018, 2019 and 2020, was signed in a room full of stakeholders and suppliers on Tuesday, during a workshop on local content.
The local auditors Ramdihal and Haynes Chartered Accounting, as well as Vitality Accounting, were present at the signing. Chateram Ramdihal was physically present at the event, while Finance Professor Floyd Haynes tuned in virtually.
According to Natural Resources Minister Vickram Bharrat, these local companies will also be partnering with an international consultant, Martindale Consultants. The duration of the contract is for four months.
“Let us move to the signing of the cost recovery audit and validation of the Government of Guyana’s profit oil share. We have the three local businesses here. Unfortunately, Mr Floyd Haynes is overseas,” Bharrat said.
“But he’s represented by Mr Ramdihal. We have also Vitality. Azar is here too. So, we have the three local companies being represented here today. They would have partnered with an international company, Martindale Consultants. So that they can gain that experience and knowledge to do oil and gas audits.” Bharrat explained that part of the contract entails the international company training the local auditors and accountants. This, he said, is to build capacity locally.
According to Minister Bharrat, they were able to negotiate with the company and bring down the cost by almost half, from the over US$1 million initially quoted.
“Initially, we had, I think was over a million dollars they asked for, but because we would have negotiated with the consortium, and they would have also consulted with their international partners, we managed to bring it down to, I think it’s US$751,000,” he said.
During a press conference in February, Vice President Bharrat Jagdeo announced that a local consortium of auditors had been identified to partner with whichever company wins the reissued tender for the audit of Exxon’s expenses post-2017.
The Vice President also assured that for those concerned about the elapsed timeframe for the audit of Exxon’s cost oil claims, there is nothing to worry about since the Production Sharing Agreement (PSA) would have to be reviewed if Exxon were to decide not to comply with the audit.
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.
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.