Godfrey Statia
November 9 ,2020
The audit of ExxonMobil’s US$460 million pre-contract costs has been completed and the report was handed to the Department of Energy to be forwarded to the company for its response, Guyana Revenue Authority (GRA) Commissioner-General Godfrey Statia yesterday said.
“We have actually completed our part and have given it to the Department of Energy to give to Exxon. When you are finished with an audit, you have to give the other party a chance to respond. That is normal. You have to inform the party of your findings, if not you have not completed the audit so that is where I know we last were,” Statia told Stabroek News when contacted.
This newspaper understands that the report was handed back to the consultant for the completion of some work and it was returned to the Department of Energy.
Stabroek News yesterday emailed ExxonMobil’s Public and Government Affairs Advisor, Janelle Persaud on if the company had received the report but up to press time there had been no response.
Last Friday, Vice President Bharrat Jagdeo told a news conference that the review of the report was still being looked and that the Department of Energy has told him that it had someone reviewing other costs up to 2017.
He reasoned that while the US$460M has been the focus, the nation has to be reminded that post contract costs totalling over US$20B have been added to that total and that will be the key area of scrutiny. “The Department of Energy said to me they have a person reviewing costs up to 2017, we have not gotten around to that as yet. We will ensure that every cent, from the beginning, to Payara, all of it, has to be reviewed,” he said.
“The post-contract costs are the bulk of it…we are talking upwards of (US$) 20B that have to be reviewed. It is a task we have to come around it. That is looking out for national interest,” he added.
In May of this year, Department of Energy Director Dr. Mark Bynoe had said that auditing of the pre-contract costs had to be extended, without cost to the auditing firm, due to the COVID-19 restrictions.
“This contract is progressing well with a multi-agency team working alongside the consultant, which is IHS Markit. The contract received a no-cost extension because of the impact of the COVID-19 pandemic,” Bynoe had told a press conference.
In December of last year, United Kingdom-headquartered IHS Markit was hired by government to undertake the auditing of ExxonMobil’s pre-contract costs and began working alongside the GRA to complete this task. Many of our contracts require the consultants to be in country with Guyanese expertise working alongside those consultants. Because of the COVID-19 pandemic and cessation of international flights, our consultants could not return into Guyana to complete aspects of their work so that has caused us some delays requiring us to provide them with a no- cost suspension,” he added.
The contract cost was pegged at US$300,000.
Bynoe had informed then that the Department of Energy and the Guyana Geology and Mines Commission (GGMC) would also be working along closely with the GRA on the project.
Statia too had explained that representatives chosen from his agency would “mirror the audit team from IHS Markit in both technical, legal and audit skills,” while GGMC’s Commissioner Newell Dennison assured that “ample and qualified officers” would be represented on the audit team.
The Production Sharing Agreement (PSA) between Guyana and Exxon affiliate Esso Exploration and Production Guyana Limited (EEPGL) and its co-venturers states that the pre-contract cost “shall include four hundred and sixty million, two hundred and thirty-seven hundred thousand and nine hundred and eighteen United States Dollars (US$460,237,918) in respect of all such costs incurred under the 1999 Petroleum Agreement prior to the year ended 2015.”
It was because the Department of Energy’s Director believed that his country lacks the capacity to audit pre-contract costs for oil recovery that the agency sought international help and had revealed that an international firm would be hired to aid both the GRA and the state audit office to discharge their obligations.