ExxonMobil and partners owe Guyana US$107.2m

Almost three years ago, this government received what was for all intents and purposes the final report by UK firm IHS Markit of the first audit of expenses claimed by ExxonMobil and its partners for the period 1999 to 2017. This covered the exploration phase leading all the way up to 2015 when the first major oil find was made and just a little past the conclusion of the reprehensible Production Sharing Agreement (PSA) of 2016.

This first audit was important for many reasons, the primary one among which was that it provided the first reading of whether Guyana could trust the oil companies when they claimed expenses. This PSA allows oil companies to take up to 75% of oil revenues each year for expenses. If they improperly claimed any part of those expenses it meant that they would be depriving the people of Guyana of profits. All Guyanese must become better aware of the PSA and the factors governing their oil wealth otherwise they are at risk of being shortchanged.

So what did IHS Markit find in this report? 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 $13 dollars out of every $100 allocated as expenses. This was an astounding finding that should have prompted the Guyana Government to immediately seek to recover the additional profit due to it which in this case would have been half of the US$214.4m or US$107.2m. It should have also remonstrated with ExxonMobil and its partners about the insupportable claims. It should then have ensured the most rigorous assessment of the next phase of expense checks: US$7.3 billion for the period 2017 to 2020 - roughly 4.5 times the figure that IHS Markit investigated.

What has happened since? The government has still not published the final IHS Markit report and ExxonMobil and company have not handed over the US$107.2m owed to the people of this country. The government received the report in March 2021 and there was absolutely nothing stopping it from publishing it. Were it not for Stabroek News revealing the findings of the report on April 2nd 2023, the public might still be in the dark.

It should also not be forgotten that

ExxonMobil was subsequently found to have been engaged in an illicit process with the head of the Petroleum Unit of the Ministry of Natural Resources to cut the questionable US$214.4m in expenses to US$3m. This shady engagement was interdicted after queries were made by Stabroek News.

The report and the recompense of US$107.2m appear stranded in the netherworld of ExxonMobil’s determination to deprive the people of this country of what is due to them and the intransigence of this PPP/C government which knows no bounds as it relates to dealing with these oil companies. Despite the Guyana Revenue Authority (GRA) having said several times that the audit cycle has come to an end, both ExxonMobil and the government continue to be derelict over the additional profit due to this country and its people.

Up to earlier this month, the Country Manager of ExxonMobil, Alistair Routledge continued to insist at a press conference that talks were still being held with the GRA on the IHS Markit audit and the one for the period 2017 to 2020.

“The government has been very clear that the authority for this is the GRA. We are in discussions with the GRA on the next steps; what needs to be done. When we have something concrete to share, we will share with you. But we are in discussions about the two audits which started; they are still in process and we have been notified about the new audit for the period up to 2022,” Routledge said when asked for an update on the audits.

This is the height of absurdity and impudence. It is time to pay up and the government needs to discharge its obligations to the people of this country and insist that the US$107.2m be paid.

The next battleground will be the audit of the US$7.3b for 2017 to 2020 which was done by a local consortium: Ramdihal, Haynes, Vitality Consulting, and Eclisar Financial & Professional (RHVE). It should first be noted that the government had not even intended for this figure to be audited. It had attempted to argue that the period for auditing had expired and it had been unable to find a local consortium to undertake the task. A public outcry forced the government to backtrack.

This report has also not been published by the government and the audit cycle is still to be completed. The best available information thus far on this report suggests that it was not sufficiently rigorous in its examination of the expenses and that big-ticket items claimed by ExxonMobil and partners were not investigated. A verdict is therefore awaited from the GRA to the government on whether these findings should be accepted. In the meanwhile, an advertisement has been placed for a third round of audits. One hopes that the auditor selected will be one with the necessary experience and ability to turn the screws where necessary.

In the meanwhile more and more questions continue to arise about the unseemly relationship between the Guyana Government and ExxonMobil and its partners. The Oil and Gas Governance Network (OGGN) and other have pointed out that seven announcements of oil discoveries in the Stabroek Block have been made public since April 2022 without any oil reserve update by ExxonMobil. To date, there have been a total of 33 announcements of oil discoveries in the Stabroek Block. In a letter to this newspaper, OGGN noted that approximately 20% of the oil discoveries are not included in the estimate of 11 billion barrels of oil equivalent associated with Guyana’s offshore oil reserves. Yet, the Guyana Government has been silent on this matter. Why?

OGGN was moved to state “that the government ministers in charge of the oil sector need to remember the basics of business economics. Even the manager of a small neighbourhood shop would know how much stock is in the shop in order to run a successful business. Exxon, though backstopped by the Government of Guyana, appears to dictate to our people that we are not deserving of our sovereign rights to know how much is our wealth and in our bank account!”

From its refusal to renegotiate the 2016 PSA, its failure to establish a Petroleum Commission to its handling of the IHS Markit audit, this PPP/C government behaves as if it is under the spell of ExxonMobil. It had better snap out of it.