International Petroleum Experts have said time and again, that cost recovery audits are only as effective as the legal and contractual provisions in place.
But in Guyana’s contract with ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL, there are a number of loopholes which may hamper the effectiveness of such audits.
The latest anomaly speaks to the fact that Guyana has no provision in the aforementioned contract to ensure it can audit the books of the company’s subcontractors.
Unlike Guyana, nations like Trinidad and Tobago have strict provisions in place which allow its regulators to check the costs being charged by subcontractors to the oil operators. This mechanism is just one way the Caricom territory protects itself against inflated costs.
In contracts Trinidad has with oil companies, there is a section called Retention. It says, “Subject to the delivery of books, records and documents to the Minister in accordance with the Contract upon termination of the Contract, all books, records and documents must be maintained by the Contractor, Contractor’s Affiliates and Subcontractors and made available for inspection until the later of: (i) seventy-two (72) Months after the termination of each Contract Year; or (ii) if any cost, amount or issue is under dispute, the date by which that dispute is resolved.”
In addition to this, there is no provision in Guyana’s contract with Exxon’s subsidiary which requires its contracting partners, CNOOC and Hess, to submit their independent audit reports of Esso’s costs to the government. (See link for further details: https://nre.gov.gy/wp-content/uploads/2017/12/Petroleum-Agreement-Oct-7-2016.pdf )
This however, is in place in Trinidad’s contracts with oil firms. Under a section called, “Audits by Contractor Party,” it states, “If any Contractor Party conducts an audit of the books and records of Operator or any other Contractor Party pertaining to the Contract, it shall provide to the Minister a copy of the audit results, a report setting out the audit exceptions, claims and queries and the manner in which these exceptions, claims and queries were finally allowed or denied by Operator.” (BY KIANA WILBURG)
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