Guyana has nominated multiple candidates for the role of sole expert to resolve a dispute with ExxonMobil and its partners over US$214 million in expenses claimed for oil operations in the offshore Stabroek Block, the Natural Resources Ministry said in a statement late Wednesday.
The nomination follows an audit by IHS Markit of costs submitted by ExxonMobil, Hess, and CNOOC for the period 1999 to 2017. In keeping with the audit’s findings, the government has challenged the recoverability of the expenses and the parties have initiated a formal dispute resolution process under the terms of the Stabroek Block Production Sharing Agreement (PSA).
“This was communicated to ExxonMobil and its partners, and both government and the co-venturers have agreed to activate the provision for a sole expert, as enshrined in the Production Sharing Agreement. The Government has submitted multiple nominees for the sole expert,” the Ministry said.
Exxon, acting on behalf of the co-venturers, has until May 31 to respond to the proposed nominees.
The Ministry said a sole expert can settle disagreements over cost recovery claims. Cost recovery affects ‘profit oil’, a term used for crude oil shared between the companies and the state after expenses are deducted.
Cost recovery audits are critical for verifying that declared expenditures by oil companies are legitimate, ensuring that Guyana’s share of profit oil is not unfairly reduced.
The Ministry also gave updates on two other audits which, when counted with the first, examined approximately US$28.4 billion in expenses incurred over 25 years dating back to 1999.
The second audit reviewed US$7.2 billion in expenses claimed by the co-venturers between 2018 and 2020. The government has rejected US$65.1 million of those expenses, and the companies have since submitted updated documentation, which is under review, the Ministry said.
The third audit, covering the period from 2021 to 2023, has been completed and submitted to the government. The Guyana Revenue Authority is currently reviewing the initial report.
Final reports for the first two audits were published online.
Guyana’s Natural Resources Ministry said it “reaffirms its commitment to the prudent management of Guyana’s oil and gas sector and will continue to keep the public informed of its work in this regard.”
