Kaieteur News – Chartered Accountant and Attorney-at-Law, Christopher Ram believes the confusion plaguing the audit of ExxonMobil Guyana Limited’s expenses totaling US$1.7B in the Stabroek Block, underscores the need for an independent Petroleum Commission. Had such an independent body been in place, Ram shared the view that Guyana would not find itself in a position where staff members at the Ministry of Natural Resources were engaged in an “unauthorized reduction” of questionable sums from US$214M to US$3M with officials from Exxon Guyana.
This discrepancy was brought to light by Vice President, Dr. Bharrat Jagdeo at a press conference last week. The official had recalled that the US$214M sum was first flagged by British Consultancy Group, IHS Markit after it audited Exxon’s expenses from 1999 to 2017. The Guyana Revenue Authority (GRA) which played a peripheral role in the audit process, gave its no-objection to the US$214M when it was first raised, advocating that this matter should be closed. Following GRA’s no-objection to the US$214M figure, authorities are expected to proceed to finalizing the report.
Jagdeo had said the ministry did not do this despite GRA’s recommendation. Jagdeo at previous press conferences told the media that the sum of US$214M was reduced to US$11M as he was under the impression that this reduction was approved by the technical people involved. The Vice President later recanted his statement, saying that the US$214M stands.
In an invited comment, Ram shared the view that the confusion plaguing the process stems from a combination of unfamiliarity of the audit process and the absence of a Petroleum Commission. “The PPP/C has been promising a Petroleum Commission for years now but has done nothing about it. Too often there is an unhealthy relationship between politicians and public officers. When things go wrong, they cover for each other,” the lawyer said.
The call for a Petroleum Commission was also made by the political opposition, especially during the debates that were held on the Petroleum Activities Legislation. Members of the A Partnership for National Unity (APNU) as well as the Alliance For Change (AFC) strongly contended that the industry should be removed from the government’s bosom and transferred to the hands of an independent agency. The government had rejected this notion. Without providing any examples, the PPP/C has argued that the model being used in Guyana is used by many modern and aged democracies. They also argued that the government would implement such a commission “at the appropriate time”.
The audit of US$1.7B in Exxon’s expenses for the oil-rich Stabroek Block has taken more than three years to be completed. IHS was hired back in 2019 by the former David Granger administration to do the exercise. The auditor’s leaked report states that “the Government of Guyana has reasonable grounds to dispute US$214.4 million plus associated overhead adjustments of the costs…”
Further, the report states that the disputed costs fall into three main categories, the first being “Defined Costs for Removal” which amount to US$34.4 million. The report states that these costs have either been included in error, are not aligned with provisions in the Stabroek Block Production Sharing Agreement, are not related to petroleum operations, or are considered to fall outside of industry best practice.
The next category is “Inadequate Supporting Documentation” which totals US$179.8 million. The British auditing team said these costs suffer from a transparency issue as the cost basis, nature and justification of these costs could not be established with the furnished documentation even after several rounds of documentation requests from the Audit Team. Although these costs may be valid, the auditing team said government has the right to the transparency of how these costs relate to Stabroek Petroleum Operations.
The final category pertains to costs for which ministerial approval is required. This is to the tune of US$270,000. The report states that these costs have been identified as predominantly related to research and development and require ministerial approval before they can be considered cost recoverable.
The Auditors also flagged a total of US$28.8 million which was incurred prior to date of January 10, 2015 when Hess Corporation and CNOOC Petroleum Guyana Limited became partners in the Stabroek block alongside Exxon.
Keep your eyes on Venezuela!
Dec 11, 2023Kaieteur Sports – Top brass officials from the International Cricket Council (ICC) and Cricket West Indies (CWI), continued their logistical inspections in Guyana, this time at the Guyana...
Dec 11, 2023
Dec 11, 2023
Dec 11, 2023
Dec 10, 2023
Dec 10, 2023
By Sir Ronald Sanders (The writer is Antigua and Barbuda’s Ambassador to the United States and the Organization of American... more
Freedom of speech is our core value at Kaieteur News. If the letter/e-mail you sent was not published, and you believe that its contents were not libellous, let us know, please contact us by phone or email.