Local consortium identified to work with int’l firm on Exxon’s cost oil audit

– VP Jagdeo says collaboration to build local capacity for future audits

When the tender for a company to audit ExxonMobil’s post-2017 cost oil claims was scrapped, the Government had called on local auditors to form a consortium to participate in the audit. And local auditors have heeded that call.
During a recent press conference, Vice President Bharrat Jagdeo announced that a local consortium of auditors has been identified to partner with whichever company wins the reissued tender for the audit of Exxon’s expenses post-2017.
“There’s been a lot of controversy about the audit, the post-2017 audit. So, we have now gone out back. We have a local consortium. We’re going out back for an audit that would allow the foreign company to work with the local people and build capacity here,” Jagdeo explained during the press conference.

“We’re hoping that after this would be done, the 2017-to-2020 audit is done, that locals would have all the capacity to do future audits. But this is here to audit Exxon’s expenditure, to see reasonableness and fairness and all of that, to protect our interest as to what is charged for cost oil.”
Jagdeo explained that this audit would be separate from the audit done by the Guyana Revenue Authority (GRA). According to him, the tax agency will have to build its own capacity to do audits for tax purposes.
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.
“We don’t mind waiting a few more days. It’s not going to change, Exxon is not going to insist that there is two years and the time has expired to do the audit. If that happens, they would have to reopen the whole PSA and I don’t think they’d want to reopen the whole PSA… so if they insist on that… we have the time and we’re going to use the little time. We’ve gone out to tender to work with the locals to build that capacity,” he 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.
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 last 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; Squire Pat, Gaffney Cline and Associates Incorporated of the UK and Calendar Law Firm. The local company was Eclisar Financial and Professional Services.