CONTRACT SIGNED: Local companies to complete Exxon’s US$9B cost recovery audits by September

Three local companies, having formed a consortium, on Tuesday signed a contract with the Ministry of Natural Resources to conduct a cost recovery audit of US$9 billion, representing three years of activities (2018 – 2020) by ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Ltd in the Stabroek Block, Liza Phase 1 project.

The contract has a duration of four months, which means that the audit reports could be expected by September.

Heading the consortium is Professor and Accountant Floyd Haynes; other representatives include officials from Vitality Consulting and Eclisar Financial and Professional Services.

The contract was signed as stakeholders met at Duke Lodge, Georgetown for the first post consultations after the Local Content Law was enacted in December 2021.

Haynes, in brief remarks, expressed confidence that the consortium will be able to complete the audits in the specified time frame, having partnered with an international company – Martin Dale Consultants – to gain the necessary experience and knowledge to do oil and gas audits.

He said it was important to temper expectations, saying “we can’t know if Exxon owes us millions until the audits are completed.

“We welcome the opportunity and thank the government for their confidence in us,” Haynes, who joined the event virtually, said.

Meanwhile, Minister of Natural Resources Vickram Bharrat said the signing of the contract finally puts to rest claims that the government was not willing to conduct the audits and that it could not be done since the stipulated two-year window for auditing had elapsed.

“There was sensational news in the media that the government was not interested in these audits and had missed the timeline but today we have to be honest and fair and give credit where credit is due,” Bharrat said as he pointed out that the audit will cover the period during which the former APNU+AFC government was in office.

The Natural Resources Minister said it was an easy option to hire an international company a year ago to do the audits but he explained that it was important in the vein of supporting local content to build local capacity in this area.

He also noted that it is costing the government less to hire this consortium of local companies to conduct the audits.

Bharrat reiterated that the cost recovery audits will also address validation of the government’s profit oil shares.

According to Bharrat, Haynes and the team submitted a bid for over US$1 million to audit the three years of activity but after negotiation that was reduced to over US$700, 000 at the time of the award.