Thursday, August 11, 2022

Guyana seeking firm to conduct cost-recovery audit, validation of profit oil share

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Guyana’s Ministry of Natural Resources is seeking consultancy services for cost recovery audit and validation of the country’s profit oil share for the period January 2018 to December 2020.

According to a notice published by the Ministry of Natural Resources, the objective of the project is to conduct an audit of the recoverable contract costs as determined by the Petroleum Agreement (PA), taking into consideration accounting good practices, international accounting standards, as well as auditing procedures and standards.

Based on the Terms of Reference seen by OilNOW, the assignment will include the validation of the Government’s share of profit oil for the period under review; while providing on-the-job training to the staff of the Guyana Revenue Authority (GRA), the Office of the Auditor General (OAG) and the Ministry of Natural Resources (MNR) [and other agencies as directed by the Government of Guyana] on the audit process.

The Consultancy is part of the Guyana Petroleum Resources Governance and Management Project (GPRGMP) which is being financed in the amount of US$20 million equivalent from the World Bank (WB). The Ministry of Natural Resources said the government intends to apply part of the proceeds to pay for consulting services.

The consultancy will encompass the following Scope of Works:

  1. Auditing, examining, and verifying all available documentation and records necessary for charges and credits relating to the Contractor’s activities under the applicable PA for the period January 2018 to December 2020. This requires:
    1. Conducting a pre-audit analysis
    2. Devising an effective Audit Plan inclusive of an appropriate methodology
    3. Executing the Audit in adherence to the provisions of the PA, applicable laws, regulations, and procedures, as well as International Good practices and Standards.
  2. Conducting verifications of the Crude Oil Valuation pursuant to the provisions of Article 13 of the PA for the Audit period as well as verify royalties remitted to the Government for the said period in accordance with Article 15 of the PA.
  1. Validation of the accuracy of the total Government Share of Petroleum for the period under review.
  1. Assisting the relevant authorities in communicating the findings of the audit to the Contractor and, if requested, represent, or accompany the relevant authorities in meetings with the Contractor.
  1. Assessing the impact of the audit on future Profit Oil revenues.
  1. Providing on the job training to selected staff of the MNR, GRA, OAG [and other agencies as directed by the Government of Guyana], as they work jointly with the Consultant and other agencies aimed at building the capacity of these agencies.
  1. Formulation and conducting seminar/workshop-based training prior to and after the execution of the audit.
  1. Providing support to the MNR in related areas of the assignment.

The consulting firm should meet the following requirements:

  1. An Internationally recognized accounting and audit firm with extensive experience in contract compliance review, joint venture audits, auditing petroleum costs under production sharing contracts and other petroleum agreements and its fiscal implications. The Consultant must have completed at least three similar assignments during the past five years.
  1. The Consultant may propose the best team combination to achieve the overall goalTo be considered for the assignment, proposed team members should have in-depth international expertise, local and regional knowledge, access to benchmarking for comparable deep-water environments and the following minimum qualifications. The Audit Team must consist of professionals who are:
      1. Transfer pricing specialists
      2. Tax lawyers
      3. Cost accountants
      4. Crude Oil valuation experts
      5. Chartered accountants
      6. Certified Public Accountants
      7. Certified Fraud Examiners
      8. Procurement and contracts experts
      9. A partner who specializes in Natural Resources/Risk Management
      10. A partner with expertise in cost recovery audits in oil and gas
  1. Team and Assignment Coordination Leader:
  1. At least a Post-Graduate Degree in Finance, Economics, Business, Accounting, and other relevant degrees with a minimum of fifteen years’ experience,
  1. Evidence of experience in the following areas: auditing oil and gas costs for cost recovery eligibility; oil and gas field design; engineering and cost estimation; experience with cost estimating tools/software; experience in developing, reviewing development plans and cost estimates (facilities and infrastructure); development of cost models in upstream infrastructure development and
  1. Evidence of track record of team leadership with a demonstration of experience working with versatile teams and excellent planning, organizational and communication skills with the ability to guide multi-disciplinary teams.
  1. Petroleum Engineer:

At least  a post-graduate degree in Petroleum Engineering, Engineering, or other relevant disciplines with a minimum of ten years of experience in the following: cost Optimization through improved CAPEX and OPEX discipline; upstream cost study in Cost Modeling and Benchmarking Field design, engineering and cost optimization CAPEX/OPEX analysis and bench-marking; understanding of upstream value chain; exploration activities and costs component, and experience in regional (Latin America) Exploration and Production.

  1. Financial Expert

At least a post-graduate degree in Finance, Management or Business related discipline with a minimum of  ten years’ experience in upstream oil and gas companies with the following relevant experience: production sharing contracts and their fiscal terms; joint venture operations; cost classifications and categorization; international procurement and procurement benchmarks; budgets and analysis of Financial Statements and cost schedules; cost allocations, taxation, transfer pricing; financial and economic modelling in upstream petroleum operations; different types of models and software’s, and understanding of IFRS and other accounting standards.

  1. Legal Expert
  1. At least a degree in Law from an internationally recognized institution with a minimum of ten years of experience as a practicing attorney-at-law working in upstream oil and gas sector with a focus on cost audits and related matters. Should be conversant with all relevant legislation, including tax laws and the petroleum law, governing the upstream sector in Guyana since they will determine the cost allowability.
  2. Evidence of experience in interpretation of relevant Petroleum Laws; Experience in Production Sharing Contracts; Joint Venture Operations; Upstream Agreements and Negotiations; and local content policies.

The Ministry of Natural Resources said the attention of interested Consultants is drawn to paragraph 3.16 of the World Bank’s Procurement Regulations for IPF Borrowers (published by the Association in September 2016), setting forth the World Bank’s policy on conflict of interest.

Consultants may associate to enhance their qualifications. The associations should clearly indicate the form of the association (Joint-venture or sub-consultancy; member in charge; other member/s and or sub-consultants). Joint ventures should submit letters of intent indicating their intent to form a joint venture if awarded the contract and shall provide the above-mentioned information for each member of the joint venture.

A Consultant will be selected in accordance with the “Quality-And-Cost Based Selection (QCBS) method set out in the procurement Regulations.

The duration of the assignment is expected to be four months, commencing June 2021.

Oil production began in Guyana in December 2019 at the Liza Phase 1 Development which is part of the ExxonMobil-operated Stabroek block.

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