Audit of Exxon’s $1.6B pre-contract costs still incomplete after three years, says GRA Commissioner General

 

It has been more than three years since a British firm, IHS Markit, was appointed to audit $1.6 billion in expenses incurred by ExxonMobil Corporation’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), in the oil-rich Stabroek Block. According to Godfrey Steven Statia, the Commissioner General of the Guyana Revenue Authority (GRA), the audit is still ongoing, and the government is awaiting feedback from Exxon’s subsidiary.

While two articles in the Stabroek News suggested that state authorities could contest $214 million in costs, Statia did not denounce these figures as inaccurate. He did, however, point out that IHS Markit’s report was not the final document. Statia also did not provide a timeline for when the audit process would be completed but noted that the government would make the report public at the appropriate time.

At a Local Content Summit held recently, Vice President Dr Bharrat Jagdeo clarified that the report is not being withheld from public scrutiny. He also indicated that if there are questionable costs that Exxon cannot justify, they would be disallowed. However, under the Stabroek Block Production Sharing Agreement (PSA), the government would first have to prove, through a process of arbitration, that the costs in question are not in keeping with industry standards and would have to be refunded for distribution among partners. It is unclear if the government will pursue this course of action if Exxon disagrees with its findings.

Observers have expressed concern over the amount of time it is taking to complete the audit, as well as the pace at which the government is approving oil projects. The second audit for costs totalling $7.3 billion, which was awarded last year and covers the period from 2018 to 2020, is also ongoing.

Despite these concerns, Jagdeo has stated that the government intends to keep the oil industry on the fast track for a minimum of 15 years, allowing investors to recoup their investments in a thriving business environment. The Guyana government has already sanctioned two additional oil projects, the Payara and Yellowtail developments, which will use the Prosperity and ONE GUYANA Floating, Production, Storage and Offloading (FPSO) vessels, respectively. The Yellowtail project, expected to come online in 2025, will cost $10 billion and have a production capacity of around 250,000 gross barrels of oil per day.

Exxon is also seeking approval for its fifth project, the Uaru field in the Stabroek Block, with talks already initiated for a sixth at the Whiptail discovery field. The Uaru field, expected to come online at the end of 2026 at a cost of $12.5 billion, will have a gross production capacity of approximately 250,000 barrels of oil per day. Exxon and its partners have a line of sight for at least 10 FPSOs offshore Guyana to extract the 11 billion barrels of oil resources discovered in the Stabroek Block.