ExxonMobil funding its own cost oil audits – Bharrat

Feb 02, 2023 News

Kaieteur News – The audit or review of the bills handed to Guyana by oil giant ExxonMobil to develop the resource is being funded by the developer.

This was revealed by Minister of Natural Resources Vickram Bharrat during Tuesday’s Sitting of the National Assembly. The Minister was at the time responding to a line of questions from Opposition Member of Parliament David Patterson when he outlined that these costs are not coming from out of the national purse.

Bharrat explained, “There is a petroleum account at the Geology and Mines Commission (GGMC) of which license fees and other dues are paid into the account and for example, the new Production License that we are issuing now we have actually included an auditing fee. So the operator is paying an auditing fee to Guyana in those new licenses and those monies are being paid into the Petroleum Account at GGMC.”

The Minister pointed out that the present audit, being conducted by a local consortium in collaboration with an international firm, is being paid through that mechanism.

According to the Yellowtail Production License granted to Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), the License holder shall pay to an account held and controlled by the Government US$400,000 to be used by the administration “for the preparation of the audit scope and the procurement of third-party auditors to supplement the Chief Inspector’s resources and develop institutional capacity for the ongoing conduct of audits…”

Notably, Exxon was required to pay this fee 30 days after the License was granted and annually on the same date for a total of three consecutive years. This would amount to US$1.6 billion.  Presently, Guyana is conducting an audit specifically targeting expenses between the years 2018 to 2020 that has already been billed to the country.

The cost of that audit is pegged at US$751,000. On May 24 last year, the contract was signed for VHE Consulting which is a registered partnership between Ramdihal & Haynes Inc, Eclisar Financial, and Vitality Accounting & Consultancy Inc. with support from an International firm- SGS and Martindale Consultants for the ‘Cost Recovery Audit and Validation of the Government of Guyana’s Profit Oil’ Share’.

The Government of Guyana (GoG) is expecting the final report on the US$7.3 billion audit to be completed by March. Bharrat explained that the first report has been handed over to the government already as he pointed out there may have been some misunderstanding regarding the expected completion date for the expenditure review. “I think from the inception when the contract was signed there was a bit of misunderstanding. In the contract it says 120 working days and I think there was a lot of misconception…that it would be 120 running days or calendar days, but its 120 working days,” Bharrat said.

President Irfaan Ali in November last year told this newspaper that the process was estimated to wrap up before the end of 2022, with the first report ready by December.

When the Head of State was questioned on the audit during a press conference on January 17, he told Kaieteur News “Well I can only tell you what you know.”

• audits, ExxonMobil, Parliament, Petroleum Account, Report