Minister of Natural Resources, Vickram Bharrat says that a preliminary report on the US$7.3b audit of cost oil claims submitted by ExxonMobil’s subsidiary, EEPGL has been completed and the final document will be ready by March.
“I would like to say that an initial update was submitted by the consortium and we are awaiting the second report which should be submitted in another two months from today,” Bharrat on Tuesday told the Committee of Supply as his agency’s budget expenditures were being reviewed and in response to questions by Opposition MP David Patterson.
More than three years after oil production started here, the public is yet to see a report on these expense claims or the even older pre-contract costs. The expense claims have a direct bearing on the profit oil available to Guyana.
The US$7.3b audit is being done by RHVE, a consortium of local accounting firms, and is expected to be completed within the first quarter of this year. The contract for the audit was signed in May last year – 22 months after the change in government. The contract is to audit Guyana’s 2018 to 2020 cost oil.
On the IHS Markit audit of pre-contract costs, which Patterson pointed out had been completed since 2020, the Minister said that a review was done by the Guyana Revenue Authority (GRA) which submitted questions for review and this saw the final document being delayed.
“The review was done by GRA indeed and they would have found that there was need to go back and do some further work with the operator which was done and a final report has now been submitted and is being reviewed by all the relevant stakeholders, including the Petroleum Unit at the GRA. Once that is over we will conclude the first audit very soon,” he said.
During last year’s consideration of the budget estimates, Bharrat had also been asked by Patterson for an update on the IHS report and he said that it was still to be completed.
In an interview with this newspaper, approximately a month later, Bharrat said queries of “lumped” sums and investigating the costs of items such as risers were being done and the process should be completed in weeks.
“Our team at the ministry and EEPGL [Esso Exploration and Produc-tion Guyana Limited] are working through some details that should be finished soon. There were some queries and we are working though those and then IHS will finish it from there,” Bharrat had explained.
“You see what they normally do, is to group or lump certain things together and we don’t have the expertise to check, with regards to all the expenses that are associated with oil and gas, as yet. Certain expenses we are not too familiar with say for example risers. How many risers you will need… this kind of technical information is what is needed. It is not as easy as auditing transportation, fuel usage or food or how much supplies. It is much different than that,” he explained.
More than a year later that process is still apparently to be completed.
President Irfaan Ali last month gave an undertaking to this newspaper to have an update on the IHS Markit audit. It remains unclear how soon the report will be released.
190 days
Meanwhile, Bharrat said that while there has been a delay with the cost oil audit, it should also be pointed out that when that company signed the contract to be undertaken in 190 days, the agreement stipulated it was working days.
He gave Patterson the assurance that the audit will be completed by the end of March.
And on payment for the audit, he said that those monies come from the Guyana Geology and Mines Commission’s coffers as there is a Petroleum Account within that semi-autonomous agency where petroleum licences fees and other monies are deposited. “They are being paid through that mechanism,” he said.
Bharrat informed that in the new production licence created by government, it stipulates that the operator pays an auditing fee which will go towards audits.
Patterson who is also the shadow Natural Resources Minister probed government’s spending on the sector and enquired about financial provisions for a gas leak management plan for the Wales gas to shore project.
Bharrat said that ExxonMobil is assisting government with studies and as such an allocation towards this would not be reflected in this year’s budget. “These studies are ongoing. The operator has been assisting with all the studies, along with our technical team so you would not see an allocation assigned to it…they are actually paying for it then, in other words,” he said.
He said that additionally, through President Ali, Qatar has volunteered to help this country build its capacity in managing the project. It is to this end he said that Guyana has secured two experts who will be in the country shortly.
“…Qatar is sending two experts to help us with the plan …this is Qatar’s way of showing their appreciation to Guyana. They will paying for that,” he said.
Qatar is one of the countries that President Ali said Guyana is having talks with on the possibility of directly allocating offshore blocks for oil and gas exploration in parallel with a bidding round this year.
Questioned by Patterson on if government believed it prudent for a country that has over a billion US$ in its Natural Resource Fund to allow the operator to conduct the gas leak plan rather than have it done independently, Bharrat said that the Production Sharing Agreement makes clear that the operator stands the cost.
“…It is not us accepting what the operator gives to us; it is us reviewing and making our input but it is built into the licence, it is part of their responsibility. It takes the expense away from us but we still have a major say in reviewing and putting our inputs into any plan,” he said.
Bharrat said that government currently has a number of other studies being undertaken and which are reviewed by independent consultants.
“A number of studies are being done by independent consultants and the ministry is reviewing all and making our input. All of these studies are currently ongoing and we have an active say,” he said.
“I don’t want it to look in any way that the operator is doing the studies for the government. As a country and the ministry responsible for the sector, we cannot have an operator doing the studies and preparing the report and we are accepting it as is. The study is being done but the ministry is reviewing,” he said as he pointed to the $25m allocation for payments to consultants this year.
