As the Guyana Government edges closer to concluding its inaugural audit of ExxonMobil Guyana Limited’s Stabroek Block expenses totalling US$1.7B, a hefty US$214M in disputed costs has been deemed the final sum. This development could push both local authorities and Exxon towards arbitration to resolve the contention.
Vice President, Dr. Bharrat Jagdeo provided clarity on the audit and the administration’s position to date during a press engagement on Thursday. The official recalled that IHS Markit which was hired in 2019 to conduct the audit had flagged US$214M in expenses that should revert to the cost bank and split 50/50 between Guyana and Exxon, which leads a consortium in the block. That US$214M figure subsequently received a no-objection from the Guyana Revenue Authority (GRA) which is tasked with overlooking the country’s interests in these matters.
Jagdeo said, “I discovered that the GRA wrote the Ministry [of Natural Resources] and said twice ‘we were not part of this audit so we cannot comment too much on the US$214M’ and then finally, they [GRA] wrote back saying that ‘notwithstanding, given the passage of time, let’s close this at US$214M.’ The ministry (then) directly engaged in a discussion with Exxon on the US$214M after GRA said this was the end of the matter. That should not have happened.”
While the engagements between Exxon and the Ministry of Natural Resources did lead to costs being significantly reduced from US$214M to US$11M, the Vice President said the government will stand by GRA’s no-objection.
He said, “The GRA’s position will stand. If they say it is US$11 or US$3M that is what we will go with. If it is US$214 that is it and everything hereafter goes to arbitration. We have a disagreement.”
Minister of Natural Resources, Vickram Bharrat also told OilNOW that he is in sync with the Vice President’s position, adding that the tax agency is the competent authority to lead the audit of expenses for Exxon or any other oil company.
In a subsequent statement issued by his ministry on Friday, it was the Petroleum Unit of the Ministry of Natural Resources that was singled out as the department that had engaged in “an unauthorized examination of documents submitted by Exxon.”
The statement said both the Vice President and Minister Bharrat were under the impression that the information submitted to them on subsequent reductions of the disputed costs emanated from the GRA which is not the case.
Upon learning of this development, Minister Bharrat said corrective action was taken immediately and staff was instructed to cease such engagements and deliberations.
Minister Bharrat confirmed with OilNOW that GRA is now in the process of finalizing the audit report.
Exxon has said that its budgets for operations in the South American country which include expenditure for approved projects and wells drilled are routinely reviewed by the natural resources ministry and that it employs robust systems to ensure Guyana gets the best market value.