–VP Jagdeo says

THE cost-recovery audit of the 2018 to 2020 expenses of ExxonMobil Guyana’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) has been submitted and is being sent to ExxonMobil for responses on the findings.

ExxonMobil now has two months to go through the audit and respond to the findings. This was explained by Vice-President Bharrat Jagdeo, on Friday, during a press conference at the Arthur Chung Conference Centre.

“Like in any audit, you have to send it and they have to give explanations as to all the findings. Once that’s done, we can say we accept or we don’t accept [their explanations]. If there is a dispute, there is a dispute resolution arrangement there. So, let us await their responses. It’s an area that we will pay a lot of attention to,” the Vice-President related.

The cost-oil 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, and will be used to verify the validity and the allowability of claimed costs by the operator.

Under Guyana’s 2016 Production Sharing Agreement (PSA), up to 75 per cent oil revenues can be used to cover production costs, with the remaining profit oil split evenly between Guyana and the Stabroek Block operators, ExxonMobil, and partners Hess and CNOOC.

The audit process is a good-faith arrangement between the government and the companies, and also an important pillar of transparency and governmental oversight of the oil-and-gas sector.

If an expense is not deemed valid, then that cost can be removed from the expenses and subsequently added to the the profit, resulting in more money for the country.
“If we disallow the expense, it, it has to be removed from the costs bank,” Jagdeo said.

It was in May, 2022, that the government signed a US$751,000 contract with an American-Guyanese consortium of auditors to examine approximately US$7.2 billion in expenses related to petroleum operations in 2018, 2019 and 2020.

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

In January, Minister of Natural Resources, Vickram Bharrat said that the much-anticipated audit was expected by March. There was some amount of delay in the audit due to accountants and auditors from the local consortium having to travel overseas for capacity building.

Jagdeo underscored that it is important that Guyana achieves the capacity to be able to thoroughly conduct such audits using the local workforce to ensure transparent audits are done.

“It’s so crucial that we build the capacity locally, because a lot of the international audit firms also work for the oil majors. And so it’s important that we have well trained local talent to do these audits. And in future, like we have done here, we have a combination of local companies and an international company working together.

So, we are hoping we can expand that,” the Vice-President said.