Better contract will not increase Guyana’s share without robust auditing, monitoring of oil companies’ expenses – Norton

Aug 24, 2022 News

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Kaieteur News – Opposition Leader, Aubrey Norton is of the firm view that a new Production Sharing Agreement (PSA) does not mean Guyana’s share of wealth from the oil and gas resources will be increased, as this will not barricade multinational corporations such as ExxonMobil from withdrawing costs from the country’s share.

To address this deficiency, Norton explained that robust auditing and monitoring of the companies’ expenses must be instituted.

The Leader of the Opposition offered this explanation in response to a question posed the Publisher of Kaieteur News, Mr. Glenn Lall, on the subject of renegotiation.

Norton said, “I did say that you have a situation where you have an agreement, you have cost oil and you have profit oil; the point I made was  that we’re in a situation where the government hasn’t developed the human resource capability or the institutional capability to be able to monitor and audit cost oil so that expenditure that should not be there, we ensure that they aren’t there, and so I said one of the first things we need to do is to develop our capacity to audit cost oil which will ensure we have profit oil in the amounts that we should have.”

“Let’s assume we renegotiate and you have a better deal, but you still don’t have the capacity to audit and monitor, what stops a multinational corporation from adding costs that were not actually in the particular project,” he added.

Norton pointed out that for this same reason, stakeholders have been pressing the need for ring-fencing to be introduced. To this end, he explained, “So I am making the point that there are many things we can do to ensure we live by our Constitution. Our Constitution says the people of Guyana must benefit. The law says that and there are a number of things we can do. Renegotiation might be one but there are many other things we can do and like I said at some stage in the near future we will outline a clear position on this issue.”

The Opposition Leader was reluctant to share any additional ways that more wealth could be raked in from the lopsided 2016 deal, stating that “we got to keep some to campaign on.”

On the other hand, he also sought to point out that while Kaieteur News sometimes operate as though oil and gas is all that matters, the Opposition will not turn a blind eye to the other areas that affect its supporters. “While we are prepared to address oil and gas, we will not allow ourselves to be placed with blinders on one issue. We want to look at all the issues that affect the people of Guyana, including the benefits from oil and gas,” Norton said.

Presently, a review of approximately US$9.5 billion in bills that were handed to Guyana by oil giant ExxonMobil is undergoing. In May of this year, a contract was signed for a four-month review of the expenses between the years 2018 to 2020.

The consultancy was awarded to VHE Consulting which is a registered partnership between Ramdihal & Haynes Inc; Eclisar Financial; and Vitality Accounting & Consultancy Inc. The Local Consortium is supported by International firms – SGS and Martindale Consultants, for the ‘Cost Recovery Audit and Validation of the Government of Guyana’s Profit Oil Share’.

Natural Resources Minister, Vickram Bharrat at the signing explained that the audit was delayed as the government was trying to ensure local companies undertake the important task even as it pushes for the inclusion of Guyanese in the oil and gas sector.

However, he pointed to the fact that the former government did not carry out the important review of the expenses it was billed, hence the belated audits are being conducted. According to him, the government should have been focusing on the 2020 to 2021 audits but must move the process forward.

While qualifying the government’s decision to use foreign companies on the review committee, the Minister explained, “The technical company is needed because our local auditors might be very familiar with the auditing (of) basic expenses (such as) fuel, meals, transportation. But when we are talking about jumpers and risers and Christmas trees, FPSO (Floating Production Storage and Offloading vessel) and these technical terms, obviously, they will need that kind of technical knowledge and expertise onboard to assist them to have a thorough exercise being done.”
He added that there will be new arrangements for future audits even as the government seeks to conduct annual and even bi-annual cost reviews for ExxonMobil.

Previously, Vice President Bharrat Jagdeo said that the country did not have the local capacity to complete the audits.

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