Latest update July 27th, 2024 12:59 AM
Mar 17, 2024 ExxonMobil, News, Oil & Gas
Kaieteur News – Guyana’s first audit report flagged some US$214 million in questionable costs racked up by the operator of the Stabroek Block, ExxonMobil during the period 1999 to 2017. These disputed costs should be returned to Guyana, pending the legal outcome, according to former Minister of Public Infrastructure, David Patterson.
He made these comments during a virtual Alliance For Change (AFC) press conference on Friday while responding to a question from Kaieteur News.
Patterson was keen to note that the first audit of some US$1.6B, conducted by the British firm, IHS Markit, flagged US$214M in questionable costs and advised that these be removed from the cost bank. This means that the sum should therefore be split as profits with Guyana. In keeping with the provisions of the 2016 Production Sharing Agreement (PSA), Guyana receives 50% of all profits which therefore entitles the country to US$107M of the disputed sum.
Patterson argued that the Guyana Revenue Authority (GRA) should ensure Exxon adheres to the same principles each local company is mandated to comply with.
He reasoned, “If GRA audits a private Guyanese company and says to us, that Guyanese company that you owe them (and) their assessment is US$107M, the private Guyanese company has to lodge that money and then have an appeal. Why is it different for Exxon?”
The former Minister said a Guyanese company would be required to lodge at least 75% of the sum and await the appeal. “Why is it, if GRA has said that they confirmed the audit is correct, why hasn’t Exxon been forced to follow the laws of Guyana, the Tax Laws of Guyana to deposit this money and then await the outcome of the arbitration or whatever process,” he questioned.
Meanwhile, on the second audit completed by VHE Consulting, that has not been made public, Patterson said the GRA has not yet pronounced on whether it has accepted the report findings. Be that as it may he pointed out, “we are now going into the third audit at the moment and there is no time limit for it (to be completed).”
Patterson reminded that he had submitted a list of proposed amendments to the Petroleum Activities Bill when it was tabled in the National Assembly. One of his suggestions was for the timeline to audit the oil companies to be the same timeline given to the Auditor General to assess the country’s national expenditure.
His proposals were wholly denied and thrown out by the government.
In the meantime, the former Minister argued, “This government is giving special favours and special consideration and treatment to Exxon and their affiliates. It’s abysmal…any person that has a problem, and everybody here knows it, GRA if they assess you, you have to put your money up before you can even appeal it, but not Exxon.”
It must be noted that the 2016 Petroleum Agreement signed by the former government allows ExxonMobil to deduct disputed costs. In fact, the contract is designed to allow the company to spend Guyana’s oil money which is later verified by auditors.
Annex ‘C’ of the PSA at Section 1.5 (b) outlines the procedures of an audit and rights of the government; it is explained: “…In the event that an audit claim by the Minister is not settled to the Minister’s satisfaction by the Contractor’s reply as provided for above, the Contractor shall be entitled to recover any disputed amounts pending final resolution of the claim…”
The same Section goes on to note that upon resolution of the claim, the Minister shall be repaid with interest. The contract states: “…any subsequent adjustments in the Minister’s share of Profit Oil following resolution of the claim shall be repaid with interest, at the Agreed Interest Rate as a first claim from Contractor’s share of future Profit Oil. In the event that the Contractor’s share of Profit Oil is insufficient to provide for the Minister’s extra entitlement including interest, the Contractor shall promptly make an equivalent payment in United States dollars to the Minister.”
Based on the agreement, Guyana can conduct an audit within two years from the end of each calendar year. At the conclusion of the process, the Contractor must be furnished with the report and its findings within 60 days to provide a response. The response from Exxon will detail its objection or acceptance of the audit claim, along with explanations thereof. The contract also allows the subject Minister to conduct further investigations within 60 days of receiving the Contractor’s response.
It must be noted that the PSA makes it clear at Section 1.5 (b) that: “…If within sixty (60) days of the Minister’s further investigation, the Parties are unable to agree to the disposition of the Minister’s audit claim, the claim shall be submitted to the sole expert in accordance with Article 26 of the Agreement.” Article 26 of the contract sets out the conditions as it relates to arbitration.
With regard to the first audit, the Guyana Revenue Authority had given its approval of the US$214M questionable sum flagged by the British auditors, however Exxon was adamant the costs should remain. Government had signaled its intent to settle the dispute via arbitration, however there has been no final announcement in this regard.
BE THANKFUL AND GRATEFUL TO THE FOREIGN EXPLOITERS
Jul 27, 2024
Kaieteur News – Former table tennis player Edinho Lewis was on Friday placed on $1,350,000 bail when he appeared at the Georgetown Magistrates’ Court before Principal Magistrate Faith...Kaieteur News – A frightening situation is developing. The law enforcement agencies have been seized a number of illegal... more
By Sir Ronald Sanders Kaieteur News – Everyone’s heart should cry out for the people of Union Island, Carriacou,... 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.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]