Exxon given more time to respond to first two audits – Routledge

Feb 15, 2025 News

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Kaieteur News- ExxonMobil Guyana Limited (EMGL) has been granted additional time to respond to the first two audits of its Stabroek Block expenses. This was revealed by the company’s President Alistair Routledge.

He made the disclosure during a press conference on Wednesday, where he confirmed that the oil giant is currently addressing queries by the Guyana Revenue Authority (GRA) and the Ministry of Natural Resources.

“For the first two audits, there’s really nothing new to report. The work is ongoing. We’re working to respond to the GRA [Guyana Revenue Authority]. They gave us a little bit of an extension because they asked us for a substantial amount of additional information. We are working to gather that, and all of this is in the spirit that we want to be transparent. We want to answer questions,” Routledge said.

The first audit, examined US$1.7 billion in expense incurred by the oil company from 1999 to 2017. That audit identified US$214 million as costs that the Government of Guyana should not allow Exxon to charge to the country’s cost bank.

Under the 2016 Production Sharing Agreement (PSA) governing the Stabroek Block, Exxon and its partners Hess and CNOC are allowed to recover 75% to cover cost, while the remaining 25% is considered profit oil and this is shared between Guyana and the oil companies.  As such, the audit of the expenses recoverable by oil companies is crucial to ascertain if actual recoverable cost is being billed to the cost bank.

British firm IHS Markit conducted the first audit and presented its findings since 2021, recommending that the government disallows Exxon and its partners from recovering the flagged US$214 million. However, since then the process has been ongoing.

Guyana’s Natural Resources Minister Vickram Bharrat had previously stated that based on advice, the government had written to Exxon stating that the final report disputes US$214 million in expenses that the oil companies submitted as cost. In August 2024, the minister had disclosed that Exxon is yet to respond to the final report on the first audit.

When asked what more is there to discuss on the first audit given that the government has repeatedly stated that the US$214 million figure is final, Routledge explained that when the final report was first submitted to Exxon, the queries raised were not specific.

“So, it was hard to give a detailed response, more specific queries have been now raised so that we are able to provide additional documentation. So that’s the process that we’re in on both the audits we are responding within the time that’s been requested, or we asked for an extension. So currently, we are very much complying with all the deadlines and we will continue to do so,” EMGL’s president told reporters.

The second audit, covering Exxon’s expenses for 2018 to 2020 and totaling US$7.3 billion, was conducted by the local consortium VHE Consulting, with international support from SGS and Martindale Consultants.

That final report was submitted to Exxon in November 2024, and the company had 60 days to respond. Permanent Secretary of the Ministry of Natural Resources, Joslyn McKenzie, at a press conference in January disclosed that the government had provided additional information requested by Exxon, and that the review process remains ongoing.

Routledge maintained that Exxon has adheres to international financial standards in its cost recovery accounting. He stated, “We believe we’ve accounted for things absolutely per the rules that are established, international standard rules. Should we, as we reach conclusion, determine that there is something not aligned, then we would accept that. But at this point, we’re still in that information-gathering, understanding the questions, and providing answers and responses.”

When pressed on the timeline for Exxon’s response to the audits, Routledge was unable to provide a specific date. In fact, Routledge said, “I can’t remember what the dates are exactly. It was a matter of several weeks, but I can’t remember exactly what the timeline was,” he said. However, he assured that Exxon remains committed to meeting its obligations. “We are very conscious of what deadlines are. Our team works very diligently to make sure that we comply with those and keeps an open door and updates the GRA and the Ministry of Natural Resources on progress.”

Kaieteur News had reported that an analysis of the second audit report revealed missing details on key expenditures that were covered in the first oil audit done, by IHS Markit. Currently, citizens can access VHE’s “Initial Audit Report for the Stabroek Block Cost Recovery Audit – 2018 to 2020” on the Ministry of Natural Resources website. That version was published on April 12, 2024 and is 135 pages long. Since last year, the government had stated that the finalised second audit will be made public – this is still to be done.

(Exxon given more time to respond to first two audits – Routledge)

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• Alistair Routledge, Audit, Exxon, Stabroek Block

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