An accounting specialist is being sought to advise the Department of Energy (DoE) on the management of cost recovery claims by operators in the oil and gas sector.
According to Terms of Reference (ToR) published on the Ministry of the Presidency’s website for “Consulting Services for Oil and Gas Accounting Specialist,” the consultancy is part of the World Bank-supported Guyana Petroleum Resources Governance and Management Project, which is intended to support the enhancement of legal and institutional frameworks and the strengthening of the capacity of key institutions to manage the oil and gas sector in Guyana.
Verifying cost recovery claims from oil companies is a key endeavour as it will impact on profit made available each year to Guyana. An earlier government ad for a consultant on auditing recovery expenses had been heavily criticized by analysts.
The ToR state that the objective of the assignment is to provide advisory services and technical support towards the establishment of cost recovery accounting within the DoE, with all activities expected to take place over a four-year period.
These include the provision of an independent fiscal accounting opinion on cost structures and submissions for cost recovery by operators; the review of expenditures and applications for cost recovery under the Petroleum Sharing Agreements (PSAs); the review of the methodology proposed for ring fencing costs in the new model PSAs and associated accounting schedules; and the provision of advice and consultation to senior officials of the DoE on matters related to cost recovery.
The scope of work for the consultant, according to the ToR, will include acting as principal cost recovery accounting advisor to the DoE in the review of an operator’s submitted quarterly and annual cost recovery statements and in subsequent cost recovery audits, applying the terms of the PSA and any relevant legislation, best practices of international accounting standards as well as auditing procedures and standards.
The consultant would be required to audit, examine and verify all available documentation and records necessary for charges and credits relating to an operator’s activities under the respective PSA. The consultant would also be responsible for determining if contract costs have been properly assigned to the correct cost category, in the correct amount and with adequate transparency level; and if contract costs are eligible for cost recovery or not.
Technical criteria
Additionally, the consultant would be required to establish technical criteria for cost recovery auditing, cost benchmarking and cost rejection, and establish procedures and policies regarding pre-approval of costs and a structured approach to cost analysis prior to auditing.
Further, the consultant is also expected to provide technical input regarding cost recovery, ring fencing, allowable cost categorisation etc. into the design and implementation of the model PSA and licences to be used for future exploration bid rounds, as well as to review and comment on the residual exposures of the accounting provisions within the existing PSAs and how the government can mitigate such exposures.
Another responsibility for the consultant, as listed in the ToR, is defining the organisational requirements for a cost recovery accounting function within the DoE, and training staff.
According to the ToR, the selected consultant will work under the direction of the Director of the DoE, or other designated officials within the DoE and will work closely with other government agencies involved in the oil and gas sector as required.
It is noted that the consultant’s work will be carried out over 80 days per year, of which at least 60 days will be spent in Guyana. “The consultant will make an inception visit of at least three weeks to formulate work programmes, perform initial training, and support urgent decisions facing [the DoE]. Subsequent visits will be for at least two weeks in duration,” they add.
When not physically present in Guyana, the consultant will be expected to remain in close contact with the DoE team to supervise and support cost audit activities
The required qualifications for the consultant include at least twenty years’ accounting experience in the oil and gas industry, involving extensive experience with cost recovery audits of international oil companies operating under a PSA regime, co-venturer audits, procurement, and company audits as well as possessing a broad understanding of development costing and cost recovery.
The selected consultant must also possess experience and ability to advise on cost recovery in the oil and gas sector, including experience from within five years preceding the date of the consultant’s application of advising sovereign governments on PSA cost recovery audits and on the resolution of disputes arising from contested cost recovery audits.
A Master’s Degree in accounting, finance, management or relevant discipline is also among the required qualifications.
Conflict of interest
The ToR note that the nominated person’s previous experience of advising the World Bank or its agencies on oil and gas sector regulatory reform should be disclosed and also specifically state that the Consultant is required to comment on any potential, actual, or perceived conflicts of interest arising out of other assignments or a conflicting involvement in other assignments. “Where the Consultant currently represents any party or potential stakeholders that would create conflict of interest or to the extent any conflict of interest would arise in the future, the Consultant shall detail any measures that may be required to avoid conflicts of interest in connection with the implementation of this assignment,” they state.
The ToR also note that a contract will initially be issued for one year, with the possibility of renewal for the duration of the project based on performance. The consultant would be expected to make their own arrangements for carrying out its services, including accommodation, transport, health insurance, document(s) translation/reproduction.
