Wednesday, February 8, 2023

Exxon’s costs subject to scrutiny by partners, Guyana government and third parties

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Officials at ExxonMobil Guyana say a layered system of reviews and audits are in place to ensure the integrity of the expenses that go into its cost bank.

They made the comments during the 26th episode of Access ExxonMobil, published on Tuesday. The company dedicated the episode to answering frequently asked questions about the Stabroek Block Production Sharing Agreement (PSA) and its operations.

On the matter of costs, ExxonMobil Guyana President, Alistair Routledge said the company’s co-venturers – Hess and CNOOC – conduct audits of its finances. They hold 30% and 25% interest in the Stabroek Block, respectively, while Exxon holds 45%. Because they are co-managers on the license and invest funds alongside Exxon, they have audit rights.

In addition to the co-venturers, ExxonMobil Guyana’s Treasurer, Katrina Masters said third party auditors also audit the company’s financial statements. Those statements are filed and made public.

Routledge said the Guyana government also has a review process in place. He said estimated costs are budgeted annually, and ExxonMobil reports its costs on a monthly basis to the government.

“Then ultimately, the government also has audit rights to come in and audit all of our expenditures,” Routledge said.

The most recent one concerns the audit of the Stabroek Block consortium’s 2018-2020 costs. The Government hired a consortium of local and foreign auditors in May, with a contract valued at US$751,000. The consortium consists of Ramdihal and Haynes Chartered Accounting and Professional Services Firm, Vitality Accounting and Consultancy Inc., and Eclisar Financial & Professional Services. They will be partnering with the Oklahoma-based Martindale Consultants Inc. and the Swiss technical company, SGS, which is leading the project. The contract includes provisions for knowledge transfer, so that ultimately, Guyanese firms will be able to conduct cost audits on their own.

The Stabroek Block partners have invested tens of billions of US dollars in exploring and developing hydrocarbon resources offshore Guyana, which since 2015, has amounted to an estimated 11 billion barrels of oil equivalent.

ExxonMobil has drilled many exploration wells, amounting to 33 commercial discoveries, according to the Guyana government. The company plans to drill about 40 more wells through 2028.

The partners have invested in developing four projects so far. Liza Phase 1 carried a cost of US$3.6 billion – 4 billion. Liza Phase 2 cost US$6 billion. Payara is costing US$9 billion. Yellowtail will carry a total cost of US$10 billion. The partners also pay operating costs for these projects.

The partners see potential for as many as ten floaters operating offshore Guyana by the end of the decade, which will require tens of billions more in investments.

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