Reacting to the disclosure by Minister of Natural Resources Vickram Bharrat that the audit of ExxonMobil’s US$460 million in pre-contract costs remains incomplete, APNU+AFC Member of Parliament David Patterson called it “unacceptable,” while questioning government’s approach.
In December Patterson sought answers through questions in the National Assembly on the status of the audits, which have been ongoing for several years.
Bharrat, in written responses laid in Parliament yesterday, stated that the Irfaan Ali-led administration remains committed to seeing the process through. However, he indicated that the audit for 1999 to 2017 is still underway, while they are working diligently in the selection of the auditors for the 2018 to 2020 period.
However, Patterson yesterday said Bharrat’s responses to issues of national importance were disrespectful not only to the people of Guyana but to the National Assembly. He reasoned that from the answers provided it suggests that they are “lumping the audits in two phases.” The first phase is to compile the cost of pre-contract from 1999 to 2016 to the initial stages of production. He stated that the audits should have been separately done to draw a line between exploration and production.
“This is unacceptable… over a year afterwards we are now being told that the pre-contract audit is incomplete,” Patterson said.
Bharrat responded in the negative to Patterson’s question which sought to clarify whether the audit of the pre-contract costs of US$460 million was completed.
“Speaker, the simple answer to the question is no, the cost recovery audit process is still on-going…,” Bharrat indicated.
In November 2020, Commissioner-General of the Guyana Revenue Authority (GRA) Godfrey Statia reported that his agency had completed its part and handed it over to the Department of Energy.
“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…,” he had told Stabroek News.
According to Bharrat, when his party took office they were alarmed at the limited work done on the audits.
He stated that they immediately engaged international consultants and local agencies to address a number of shortcomings. He did not provide an explanation on what were the shortcomings addressed.
“Currently, the government is working to answer every questionable detail with the operator and the auditor to ensure that all expenditures are justifiable and accounted for as per the terms of agreement,” he said.
Undertaking
Bharrat further added that the audit of the post-2017 US$9 billion production costs is an undertaking of the government and there is no need to request an extension from ExxonMobil. Patterson questioned if the Ministry of Natural Resources or any other agency with the oversight of the oil and gas sector, has approached ExxonMobil for an extension of the deadline for auditing their over US$9 billion in expenses.
“This is not an ExxonMobil, Esso Exploration and Production Guyana Limited (EEPGL) nor any other oil company work. This is the duty of the government to get this done,” Bharrat stressed.
“We are in the final stages of completing the first cost recovery audit, which covers the period of 1999 to 2017, a process that was left undone and found wanting by the previous administration. We are now in the process of ensuring the second cost recovery audit process can be commenced. This second period of audit for the Stabroek Block is from 2018 to 2020. So, Mr. Speaker, we are working to ensure that we have a diligent process and procedures in our responsibility of cost recovery audits, which will include all active offshore blocks of Guyana,” he added.
Bharrat further refuted the suggestion that his government discontinued the tendering process for the selection of auditors for the post-2017 expenses.
In his written response, he said that the government is still in the process of evaluating those tender documents from bidders who responded to the advertisement for the procurement of services.
“…Given that this government remains committed to local content development at the national level, there is little doubt that we have the requisite baseline technical accounting skills to participate in the post-2017 cost recovery audit process,” he said before adding that local firms will be working alongside the international firms in a bid to gain experience and exposure in conducting petroleum cost audits.
Last July, five companies — presented proposals for consulting services for a cost recovery audit and validation of Guyana’s profit oil share. They were: Bayphase Limited which is an international Oil and Gas consultancy based in the United Kingdom; Rosa Correia & Associados (RCA); which is an auditing and consulting firm based in Lisbon, Portugal; Swale House Partners Risk Management and Natural Resource Specialists and global law firm Squire Patton Boggs, who submitted a joint proposal; petroleum consulting company based in the UK, Gaffney Cline & Associates; local accounting and firm Eclisar Financial & Professional Services; and the Calendar Law Firm.
Additionally, Bharrat disclosed that some US$250,000 was budgeted in 2021 to be expended for the auditing of the post-2017 costs.
“This government has said countless times, we are determined to ensure the greatest levels of transparency and accountability in the management of the oil and gas sector…,” he added, before responding in the affirmative to the question on whether the government budgeted for the audits.
