Cost-recovery audit for completion in March 2023

THE last report for the much-anticipated cost-recovery audit of the 2018 to 2020 expenses of ExxonMobil Guyana’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) is expected by March, 2023.

Speaking before the National Assembly on Tuesday as the House continued to examine the 2023 budgetary estimates, Minister of Natural Resources, Vickram Bharrat, said that there was some misconception on when the audit was due.

“It said 120 working days. And there’s a misconception that it would be 120 running days or consecutive calendar days. But it’s 120 working days, so the last report is due in March of 2023,” Minister Bharrat explained in response to questions from Opposition Member of Parliament, David Patterson.

The audit process will provide a detailed look at the expenses that ExxonMobil Guyana has claimed and recovered against revenues generated in the oil-and-gas sector. A preliminary report was submitted to the government in December.

The audit process is a good-faith arrangement between the government and companies, and also an important pillar of transparency and governmental oversight of the oil-and-gas industry.
It is just one of many activities taking place under the Ministry of Natural Resources’ Guyana Oil and Gas Capacity-Building Project.

Bharrat said that some amount of delay in the audit was due to accountants and auditors from the local consortium having to travel.

“The whole idea of having a local consortium participating in this is to build capacity, so there has been a slight delay but it is at the expense of building capacity locally so that we can have this local consortium, and even add more local companies to them, the door is not shut to that,” Minister Bharrat related.

He added: “What has happened since then is that the consortium would have sent a number of their accountants and auditors to Oklahoma to do some training programmes… they went to Houston as well too.”

Capacity building in the area of human resources will bode well for the ability of Guyana to do future audits, and even result in more audits within shorter time periods.

“They can do future audits, and we can reach a stage where we’re not just auditing 2018 and 2019, but we can actually order 2021 and 2022 at half yearly audit. [We can do that] once we have that capacity.

“We do have auditors and accountants in Guyana, but can they actually audit oil-and-gas expenses? The answer to that is no. They need to familiarise themselves for the expenses associated with the oil-and-gas sector. If we’re going to talk about a riser or drilling fluid then they’re not quite familiar with that. So it’s more of a learning process too and building capacity,” Bharrat explained.

It was in in May, 2022, that the government 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 expenses.

The contracts were awarded to Ramdihal & Haynes Inc., Eclisar Financial, and Vitality Accounting & Consultancy Inc. The local consortium is supported by international firms – SGS and Martindale Consultants.

As part of the contract, the local companies were expected to benefit from capacity building which would eventually see them conducting such audits independently.

The American-Guyanese consortium of auditors is examining approximately US$7.2 billion in expenses related to petroleum operations in 2018, 2019 and 2020.

Under the 2016 Production Sharing Agreement (PSA), up to 75 per cent of annual oil revenues can be assigned to production costs, while the remainder comprises profit oil to be split evenly between Guyana and the Stabroek Block co-venturers.

Once the audit is completed, it is expected to be made public and submitted to the Auditor General’s Office.

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