No more engagements; arbitration likely – Jagdeo on disputed Exxon’s cost oil claim

…as GRA told to initiate next step

The Guyana Revenue Authority (GRA) has been advised by the Natural Resources Ministry to proceed onto the next step, which could eventually lead to arbitration, in order to settle the US$214.4 million cost oil claim that was flagged during an audit of ExxonMobil’s expenses racked up between 1999 and 2017.
Vice President (VP) Dr Bharrat Jagdeo, during his weekly press conference on Thursday, made it clear that there is “no room” for further engagement on the disputed cost oil claim.
In 2019, British firm IHS Markit conducted an audit of ExxonMobil Guyana Limited’s (EMGL) cost oil expenses incurred between 1999 and 2017 from its operations in Guyana and flagged US$214.4 million as questionable costs.
Following months of its own review, GRA – the technical body tasked with advising the Government on the audited oil expenses – had given it’s no objection since 2023 to the British firm’s recommendation to adjust the cost bank by US$214.4 million, something which was supported by the Government.

On Thursday, the Natural Resources Ministry in a statement that this position remains unchanged and clear, adding that ExxonMobil has also been advised of this.
Section 1.5 (b) of Annex C to the 2016 Stabroek Block Petroleum Agreement, signed between ExxonMobil and the then A Partnership for National Unity/Alliance For Change (APNU/AFC) Government, allows for the submission of disputes concerning the audit to expert determination within sixty days of being informed of the final position.
According to the Natural Resources Ministry, it had advised Exxon of this intention via a September 25, 2024 letter but the United States (US) oil major wrote the Subject Minister, Vickram Bharat, seeking an extension to May 15, 2025.
In its capacity as delegated pursuant to Article 6 of the 2016 Stabroek Block Agreement, the GRA responded to the Ministry on December 11, 2024 regarding Exxon’s request, outlining the process required prior to the engagement of a Sole Expert and recommended that to afford due process that an extension be granted to January 25, 2025, given the provision of the additional schedules that were not previously provided.
“The GRA has now been advised by the MNR (Ministry of Natural Resources) to take the next step that is required, and will initiate the same immediately in keeping with the terms of the PSA (Production Sharing Agreement),” Thursday’s missive stated.
Process initiated
VP Jagdeo subsequently told reporters at his Thursday press conference, that this process that will be initiated by the GRA could lead to arbitration.
“They have a prescribed process in the PSA, they have to go through that process which could ultimately end up at arbitration. There is no bilateral negotiation anymore on the US$214 million. It’s established now that we have differences over the US$214 million. Exxon asked for more time to submit more documents, we said no, that’s it,” the VP posited.
At a press conference in February, ExxonMobil Guyana President, Alistair Routledge, had told reporters that they were given “a bit of extension” by the GRA and they were putting together the information to be submitted.
“They asked us for some substantial amount of additional information. We are working to gather that. All of that is in the spirit that we want to be transparent, we want to answer the questions,” Routledge had noted.
Previously, the ExxonMobil Guyana President had stated that arbitration is a last resort.
“I don’t have any intent to call on an arbitration. I don’t think an arbitration, [that] that’s the right way to get to resolution. But at the end of the day, its laid out in the petroleum agreement… Ultimately the next, logical step would be to involve an independent expert. If we can’t resolve that, way there is the provision for arbitration. But arbitration is generally a last resort and quite expensive process,” Routledge had stated during a press conference last year.
Meanwhile, there are two more oil audits of Exxon’s expenses in Guyana.
In the second audit, done by a consortium of local and international firms, VHE Consulting, for the period 2018 to 2020, Exxon has responded to the audit findings.
According to Natural Resources Ministry in its Thursday statement, VHE is responsible for reviewing this response as part of its contractual obligations and that process is still ongoing.
Moreover, VHE Consulting has also won the contract to conduct the third cost oil audit for 2021 to 2023.