Three years on… Audit of Exxon’s US$1.6B pre-contract costs still ongoing - GRA Boss

Three years on… Audit of Exxon’s US$1.6B pre-contract costs still ongoing – GRA Boss

Apr 06, 2023 News

Kaieteur News – It is now more than three years since a British firm, IHS Markit, is yet to complete an audit of US$1.6B in expenses for the oil-rich Stabroek Block. Those costs were incurred during the period 1999 to 2017 by ExxonMobil Corporation’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL).

Confirming the status of the audit was Commissioner General of the Guyana Revenue Authority, Godfrey Steven Statia. His clarification came on the heels of two articles published by the Stabroek News on IHS Markit’s report that it provided to the PPPC regime. Stabroek News comprehensively, and clearly, outlined that there were some US$214M in costs that could be contested by State authorities.

Vice President, Dr Bharrat Jagdeo

GRA’s boss did not denounce these figures as inaccurate. He did note however that IHS’ report, as is being quoted, is not the final document, adding that government is now at the stage of awaiting feedback from Exxon’s subsidiary. He also did not provide a timeline on when this process would be completed. Statia also noted that the government will make the report public at the appropriate time.

At a Local Content Summit held on Tuesday, Vice President, Dr Bharrat Jagdeo was keen to note that the report is not being withheld from public scrutiny. He said too if there are costs that are questionable, and Exxon cannot adequately justify same, then it will be disallowed. According to the Stabroek Block Production Sharing Agreement (PSA), it would not be such an easy walk in the park. Government would first have to prove through a process of arbitration, that the costs in question are not in keeping with industry standards and would therefore have to be refunded for distribution among the partners. Government has not said if it would take this course of action, should Exxon maintain its disagreement with its findings.

Furthermore, the length of time the audit report is taking to be completed has caused some degree of concern among observers. Some individuals have said, for example, that authorities should properly explain why it is taking so long to complete an audit for a company when the Audit Office of Guyana takes approximately 12 months to audit and produce a report on the nation’s accounts.

There are also concerns about the accelerated pace at which government is approving oil projects and the difficulties that would ensue for cost regulation and monitoring since it is still stuck at auditing costs associated with the 1999 to 2017 era. A second audit is currently underway for costs totalling US$7.3B which were incurred from 2018 to 2020. That contract was awarded last year May. That too is still ongoing.

GRA Commissioner General, Godfrey Statia

Be that as it may, Jagdeo said at the Local Content Summit that government intends to keep the industry on the fast track for a minimum of 15 years so that investors, both local and foreign, will have enough time as well as a thriving business environment to recoup their investments.

The Guyana Government has already sanctioned two additional oil projects, namely the Payara and Yellowtail developments which will use the Prosperity and ONE GUYANA Floating, Production, Storage and Offloading (FPSO) vessels respectively. The Yellowtail Project costs US$10B and is expected to come online in 2025 with a production capacity of approximately 250,000 gross barrels of oil per day.

Exxon is awaiting approval for its fifth project at the Uaru field in the Stabroek Block with talks already initiated for the sixth at the Whiptail discovery field. Uaru which is expected to come online at the end of 2026 at a cost of US$12.5B will have a gross production capacity of approximately 250,000 barrels of oil per day.

Exxon and partners currently have a line of sight for at least 10 FPSOs offshore Guyana to extract the 11 billion barrels of oil resources discovered in the Stabroek Block.

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

Commissioner General, Godfrey Steven Statia, Guyana Revenue Authority, IHS Markit, PPPC

Latest News