Latest update May 12th, 2024 12:59 AM
Apr 07, 2018 ExxonMobil, News
…Guyana denied this opportunity in its oil deal
In all Production Sharing Agreements (PSA), the Government is allowed to conduct audits of the records held by oil companies.
But this usually comes with conditions which can either be in favour of the State or the oil company.
In Guyana’s Production Sharing Agreement with US oil giant, ExxonMobil, the government is allowed to conduct audits on the company’s records once seven days notice has been given. If there are important records for ExxonMobil regarding works here, but these are held outside of Guyana, the government is not allowed to go after those documents.
While this situation only benefits ExxonMobil, the oil giant had no qualms in signing on to better arrangements with the Liberia.
ExxonMobil agreed that it would keep all of its relevant accounting records in Liberia. Should it fail to do so, and there are documents needed for an audit that is out of the jurisdiction, then the company would stand all associated costs for the government to retrieve those records and audit them.
The contract between Liberia and ExxonMobil states that “the Contractor shall keep registers and accounting books at the location at which the Contractor has established regional or international group accounting operations from time to time. The Contractor shall maintain copies of such registers and accounting books in Liberia after the Operator has established a local office.”
It goes on to state that at any time, with 60 days’ Notice to the Contractor, the Ministry of Finance of Liberia, at its sole expense, may, acting in accordance with international accounting and auditing standards and through an internationally recognized independent auditor, cause an independent financial audit or review of the books and records of any Person participating in the oil project with the contractor.
The Production Agreement says that the Contractor or such person will cooperate to provide copies of the information, books and records needed to complete the
review or audit.
The oil deal notes, however, that if the Contractor or such person is unable to provide or procure the provision of the information, books or records
needed to complete the audit in Liberia, the Contractor or such Person, shall bear both the reasonable travel cost of a reasonable number of auditors to travel to the place where such information, books and records may be obtained and their accommodation costs for a reasonable amount of time necessary to complete their review.
The Government of Liberia was also careful to note that such costs shall not be included in ExxonMobil’s Petroleum Costs which can be recovered.
Listen how to run an oil country
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