Posterity will record that a doughty battle is being waged by civil society activists, the media and ordinary citizens for accountability in the oil and gas sector, to ensure that the environment is not compromised and to make certain that the country and its people are not being cheated of what belongs to them.
The work of these groups and individuals has been made even more difficult by a government that ferociously condemns and dismisses them as being against progress and in pursuit of some agenda. Instead of mobilising these various groups and individuals and their ideas in strengthening the country’s management of the oil and gas sector, the government has scorned them and conducts itself as if it is a partner of the petroleum companies.
Since taking office in August 2020, the evidence of the PPP/C government’s behaviour as if it was an equity partner in the Stabroek Block with ExxonMobil has been clear to see from the lax manner it handles the company all the way to the fact that Guyana is still without a Petroleum Commission which would have been expected to make ExxonMobil toe the line.
It is also exemplified in matters such as the handling of the IHS Markit report on the auditing of the first US$1.67b in expenses claimed by ExxonMobil and its partners for the period 1999 to 2017. To its credit, the APNU+AFC government hired the UK firm, IHS Markit to undertake the audit examination. The final version of the report after reconciliations was submitted to the PPP/C government in March 2021 – two years ago. That report remained hidden from public view until a new item on its findings appeared in yesterday’s Sunday Stabroek.
Among the major findings in the audit report was that 12.8% of the US$1.67b expenses claimed by ExxonMobil and its partners could be disputed by the Guyana Government. The percentage that can be queried translates to US$214.4m – roughly one fifth of the amount injected into this year’s budget from oil and gas revenues.
This is exceedingly important as if the government challenged this US$214.4m and it was eventually disallowed then it would mean that this amount would be available for further profit sharing between Guyana and its oil partners. The 2016 Production Sharing Agreement (PSA) between Guyana and Exxon’s subsidiary and its partners caters for a maximum allocation of 75% of annual oil production to cost oil with the remainder (25%) to be shared equally between this country and its petroleum partners. If ExxonMobil inflates its claims then it is in essence denying Guyana profit oil.
So once the final IHS Markit report had been submitted following the completion of the audit cycle where Exxon and its partners would have been allowed to respond to the findings, it was for the government to take steps to preserve the revenues due to this country. Perhaps, ExxonMobil responded to the IHS Markit report and convinced all and sundry that the cost claims were legitimate or maybe it could not convince the authorities, or worse, did not respond at all. Whatever occurred, the public has been kept in the dark and remains there. No one knows if the government and the Guyana Revenue Authority pursued Exxon and its partners to acknowledge that their claims were inflated and that more profit oil should be eventually due to this country. Here is where all of the sanctimonious palaver of the government about looking after the interest of the country and its people rings hollow.
Why would it keep this report from the public when the people should be told whether this behemoth extracting oil offshore is acting honestly? For around two years, Stabroek News pressed every single relevant official for the release of the findings of the audit only to be fobbed off. The results are now out in the public domain and all of those who have to be accountable must now make themselves accountable.
The report identifies disputable costs as those which were listed in error or violate the PSA and others which came with no documentation or required the approval for the minister. Given the nature of the controversial PSA it had been clear from the outset that a careful, forensic examination was necessary of all of Exxon’s claims to ensure that this country was not cheated of profit. APNU+AFC’s hiring of IHS Markit therefore operated as a litmus test of how the oil companies would operate only for the PPP/C government to duck the report in what would be seen as appeasement and collaboration with Exxon.
Indeed, not so long ago the PPP/C government was prepared not to audit billions of US$ in oil company claims on the spurious grounds that competent auditors could not be located here. Public outrage put an end to that absurdity and that audit cycle is now coming to an end. The findings of this new audit will, of course, be of great interest to the public given the IHS Markit report.
In the same way that former President Granger has to be held accountable for the abominable 2016 PSA that was imposed on the country, President Ali also has to be answerable for acts of dereliction such as it pertains to the IHS Markit audit findings. He must answer to the citizens of this country as to why his government has not released even a redacted account of the findings and what steps his administration has taken to preserve monies accruable to the state.
ExxonMobil inflicted an oppressive agreement on the country in 2016 compliments of a weak, pliant government. Little did the country know that even though Exxon is getting away with a sumptuous deal it is still given to making insupportable claims on what should be Guyana’s profit all the while trying to appear as if it, Hess and CNOOC are model corporate citizens.
The people of this country have been ill-served by two governments with respect to oil and gas. President Ali still has half a term to prove that his government is working in the interest of the people and not of cronies, rising oligarchs and ExxonMobil et al. The public will keep watch.
