Government has disclosed that a seeming mix-up has stalled the completion of the audit of the pre-contract costs for ExxonMobil,and its partners in the Stabroek Block as the United Kingdom firm hired to undertake the audit submitted its final report without ever providing a draft and they have been written to in order to correct this.
“They were supposed to have three deliverables – an initial report, a draft, and then the final report. They submitted the draft as the final report on 30th July, I believe,” Vice President Bharrat Jagdeo said on Tuesday at a press conference.
“Since then, in the first few months I think we did not pay enough attention to it. Since then, we have had the GRA and the Department of Energy look at the report – there is some committee. The draft, that report, has to be sent to ExxonMobil [who] will have to comment and [as] with any audit, a final report [will] be completed. That will determine whether we accept all of the expenditure that was made in the pre contract as well as additional expenditure. We would then determine if all of those costs are consistent with the contract’s understanding,” he added.
He noted that if there is an adverse finding, government will decide on how it moves forward.
Nonetheless, preparation is ongoing so that the 2017-2020 costs could also be audited but with heavy local content terms attached to whichever foreign firm is selected. “Apart from that, the terms of reference have already been prepared for the new contract to be issued that would have to contain local content to do the audit for the period 2017 to 2020,” the vice-president noted.
In December of last year, Guyana Revenue Authority (GRA) Commis-sioner-General Godfrey Statia had told the Stabroek News that the audit of ExxonMobil’s US$460 million pre-contract costs had been completed and the report was handed to the Department of Energy to be forwarded to the company for its response.
“We have actually completed our part and have given it to the Department of Energy to give to Exxon. When you are finished with an audit, you have to give the other party a chance to respond. That is normal. You have to inform the party of your findings, if not you have not completed the audit so that is where I know we last were,” Statia had said.
This newspaper understands that the report was handed back to the consultant for the completion of some work and it was returned to the Department of Energy.
ExxonMobil, according to sources, never received any report from the DoE.
At a cost of US$300,000, United Kingdom-headquartered IHS Markit was hired by government in 2019 to undertake the auditing of ExxonMobil’s pre-contract costs and had begun working alongside the GRA to complete this task.
“Many of our contracts require the consultants to be in country with Guyanese expertise working alongside those consultants. Because of the COVID-19 pandemic and cessation of international flights, our consultants could not return into Guyana to complete aspects of their work so that has caused us some delays requiring us to provide them with a no-cost suspension,” Statia had explained on why more time had been requested by company last year.
Statia too had explained that representatives chosen from his agency would “mirror the audit team from IHS Markit in both technical, legal and audit skills,” while GGMC’s Commissioner Newell Dennison assured that “ample and qualified officers” would be represented on the audit team.
The Production Sharing Agreement between Guyana and Exxon affiliate Esso Exploration and Production Guyana Limited and its co-venturers states that the pre-contract cost “shall include four hundred and sixty million, two hundred and thirty-seven hundred thousand and nine hundred and eighteen United States Dollars (US$460,237,918) in respect of all such costs incurred under the 1999 Petroleum Agreement prior to the year ended 2015.”
