OPPOSITION Leader, Aubrey Norton, on Tuesday, called on the authorities to build capacity to audit cost oil even as government ramps up measures in this direction through involvement of local firms.

Speaking at his weekly press conference on Tuesday, Norton, who is also Chairman of the A Partnership for National Unity (APNU), underscored that auditing capacity is a crucial element in ensuring Guyana gets the best value from output of its oil and gas industry.

“Auditing is a critical as a first step. One of the first things we need to do is to develop our capacity to audit cost oil which will ensure we have profit oil in the amounts that we should have. [Even if] you renegotiate [oil contracts] and you have a better deal, if you still don’t have capacity to audit and monitor what stops a multinational corporation from adding cost not in the particular project,” said Norton.

Audits help governments and companies maintain a transparent working arrangement and ensure costs are tightly controlled.
Cost recovery and compliance audits would be very vital under Production Sharing Agreements (PSA) regime and service contracts, whereas, value for money and financial audits may be critical under the concessionary arrangements.

Under the PSA governing the Stabroek Block, Guyana will be receiving, at minimum, two per cent royalty on all oil produced in the block, government also benefits from a 50 per cent profit sharing.

SIGNIFICANT COMPONENT
The government is required to audit the costs claimed by ExxonMobil for its operations, to ensure claimed expenses are valid. As such, the audit is seen as a significant component.
Norton, during his press briefing, however, did not address why the former APNU+AFC administration did not develop the capacity to conduct cost recovery audits, or contracted a firm to conduct those audits.

The government in 2021 pushed for the involvement of local firms in the cost oil audit, through an arrangement where the local firms work with international enterprises to undertake the job.
This was strategically part of the government’s plan for local companies to be able to benefit from capacity building which could eventually see them conducting such audits independently in the future.

As a follow through on its commitment of local involvement, in May, the Ministry of Natural Resources, signed a contract with a consortium of Guyanese auditors to the tune of some US$751,000 to conduct a cost recovery audit of ExxonMobil’s post-2017 (2018-2020) expenses.

PARTNERSHIP
The contract was awarded to Ramdihal & Haynes Inc., Eclisar Financial and Vitality Accounting & Consultancy Inc, a local consortium supported by international firms, SGS and Martindale Consultants.

This cost recovery audit is expected to be completed by September.
In addition to setting the stage for local audit firms to benefit from involvement in cost recovery audits, the government has also supported capacity building of the Guyana Revenue Authority (GRA) to conduct its own cost audits for the oil sector.

GRA has already audited the over US$460M in pre-contract cost provided by ExxonMobil while searching for oil in Guyana.
The Audit Office has also been working with the British Columbia Audit Office and the Canadian Audit and Accountability Foundation to build capacity to audit various aspects of the oil and gas sector.

Meanwhile, the local audit office has already been able to conduct a performance audit of Guyana’s preparedness for Marine Oil Spill Response.

The Audit Office is charged with scrutinising the expenditure of public funds on behalf of the Parliament of Guyana. The office conducts financial audits of all publicly funded entities, including donor-funded entities, local government agencies and trade unions, in Guyana.