says full co-operation, transparency and resolution being pursued

PRESIDENT of ExxonMobil Guyana Limited (EMGL), Alistair Routledge, has addressed concerns surrounding oil giant cost-recovery audits and stressed the company’s commitment to co-operation with local authorities to ensure transparency in their operations.
ExxonMobil finds itself in the midst of two cost-recovery audits. The first audit covers expenses dating back to the beginning of the Stabroek Block licence in 1999, extending to 2017, with an estimated value of 1.678 billion USD. The second audit focuses on the 2018 to 2020 period, with costs totalling 7.2 billion USD.
During a press conference at the company’s Kingston, Georgetown headquarters, on Tuesday, Routledge explained ExxonMobil’s stance and actions in relation to the audit process.
Currently, Senior Petroleum Coordinator at the Ministry of Natural Resources, Bobby Gossai Jr., is facing “disciplinary measures” over the unauthorised engagement with ExxonMobil on the cost-recovery audit.

This action comes in light of Gossai’s involvement in dealings related to the oil giant’s spending between 1999 and 2017, following an investigation into the US$214 million audit.
“We always cooperate with authorities on investigations where we may be required. I feel very sorry for Mr. Gossai… He was working diligently and in support of the process and, unfortunately, the right paperwork hadn’t gone to the right people. But I think he’s worked diligently with the best of intent,” Routledge said as he emphasised Exxon’s willingness to cooperate with the probe.

Routledge clarified that the first audit, which has gained significant attention, commenced in 2019, spanning a period of more than two decades. The audit process, initiated under the APNU+AFC administration, experienced a hiatus before the PPP/C government took over to oversee its later stages.
“When we talk about an audit process like this, it is very normal for us to be audited. We’re audited by our co-venturers who have just as much interest in the government and ensuring that all the costs that go into the cost recovery pool are appropriate and in line with the standard you would expect to have been properly accounted for with the right kind of documentation.”

Routledge further added, “Similarly, we have internal auditors, and we have external auditors. So at least four sets of eyes will be looking across these expenses for these.”
Regarding the initial audit, the government’s auditing firm, IHS Markit, issued a draft report containing queries about an amount of approximately 214 million USD.
He pointed out these queries were not findings of irregularities but sought additional documentation and clarification.
EMGL president said that the oil giant worked diligently to provide further documentation.

He said, “We believe that we provided the documentation to substantially reduce the queries that were out there from the initial draft audit.”
The Guyana Revenue Authority (GRA) is the authoritative body overseeing the audit, as pointed out by the PPP/C government.
Routledge said that GRA requested ExxonMobil to re-engage IHS Markit to review the documentation provided after the initial audit was halted. However, he anticipates that the remaining queries will be resolved, with only a minor de minimis amount possibly unverifiable due to the age of the records.
“We’re very clear on what the international standards are for us in the oil and gas business. We follow those standards, we booked appropriately. We have a lot of checks and balances in place to ensure appropriately.

“We believe that we provided the documentation to substantially reduce the queries that were out there from the initial draft audit and that it was that sort of amount. We did not have any formal agreement from the ministry. And indeed, as the ministry, the Minister or the Vice President, made it clear that there is the expectation that the GRA is the ultimate authority,” he said.

Routledge clarified that while he explained the audit process to the APNU Opposition, he had pointed out that no final agreement has been reached or authorised by either the ministry or the GRA.

He said that ExxonMobil continues to cooperate with the GRA and relevant authorities to resolve any remaining queries, finalize the audit process and ensure transparency in their operations within Guyana’s burgeoning oil and gas sector.

Minister of Natural Resources, Vickram Bharrat, recently said that since the inception of the audit, the government’s position has been to consistently emphasise that it is the GRA which plays the pivotal role in determining the final outcome of the audit in question, in line with the Production Sharing Agreement (PSA).
He underscored that the Ministry of Natural Resources’ role in the process was to oversee the audit, as stipulated in the PSA, and facilitate information exchange among all relevant parties, including the GRA.

However, based on advice from Gossai, that initial claim of US$214,911,994 was reduced to US$3,414,853.68.
In response to this dramatic shift, Minister Bharrat formally sought clarification from the GRA, in a letter dated November 28, 2022, seeking a “No Objection” to confirm this revised figure.

Fast forward to July 2023, Minister Bharrat said that Gossai, while in a meeting with himself and Vice-President Bharrat Jagdeo, reported that the initial sum was further adjusted, first to US$11,497,140 and eventually down to US$3,414,853.68.

Minister Bharrat, considering his previous correspondence with the GRA and the agency’s critical role in the audit process, said that he assumed that this reduction had been achieved in consultation and collaboration with the GRA.

“I subsequently learnt that the GRA did not agree with the position, and the initial claim of US$214,911,994 remains the same,” he said.
In light of the foregoing developments, Minister Bharrat reiterated that the government’s stance remains unwavering, affirming that the GRA is the sole entity authorised to make the final determination on the matter.

“After examining all the facts, it is clear Gossai acted without the requisite authorisation to engage EEPGL [Esso Exploration and Production Guyana Limited] and provided inadequate advice, and as such, I have asked the Permanent Secretary to take the necessary disciplinary measures,” the Minster said in his letter.
Additionally, he said that the government will establish new protocols and systems to prevent similar lapses in the future, emphasising full disclosure and transparency in dealings with stakeholders in the sector.

In auditing Exxon’s expenses from 1999 to 2017, IHS Markit flagged a US$214M sum of questionable spending. This figure received a no-objection from GRA, and an indication to close the US$1.6B audit of Exxon’s expenses.

However, following this no-objection, it was revealed that a staff member of the Ministry of Natural Resource’s Petroleum Unit engaged ExxonMobil’s local subsidiary, formerly known as EEPGL, in reducing the US$214 million to US$3 million.