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APNU says: Guyana’s first US$1.6B oil audit sets dangerous precedent for US$40B in bills still to be checked

APNU says: Guyana’s first US$1.6B oil audit sets dangerous precedent for US$40B in bills still to be checked

ExxonMobil, News, Oil & Gas

Kaieteur News – Guyana’s first audit of oil expenditure, racked up by ExxonMobil for exploration activities in the Stabroek Block between the period 1999 and 2017, has erupted into chaos with the country now at loss for what may lie ahead.

Economic Advisor to the Leader of the Opposition, Elson Low

Economic Advisor to the Leader of the Opposition, Elson Low

With the industry rapidly developing, with over 33 discoveries made in the Stabroek Block alone, some industry experts believe Guyana is grossly unprepared to manage the resources offshore. In fact, Guyana has been struggling to keep apace with its rapidly developing petroleum industry as billions in bills submitted by Exxon and partners are yet to be reviewed, while the country is now looking to import labour to meet the human resource shortage.

With some U$$214 million in costs flagged by a British auditor as questionable, for US$1.6 billion in bills reviewed for the ExxonMobil’s activities, the Opposition believes this has set a dangerous precedent of the reviews still to be undertaken. In an invited comment earlier this week, Economic Advisor to the Opposition Leader, Elson Low told this newspaper that with the first review marred with controversy, oil companies must be taking notes to plot their future moves here.

Guyana recently concluded an auction for 14 of its oil blocks with eights of the spots attracting the attention of investors.

In the meantime, ExxonMobil and its partners have been investing billions of US-dollars to develop the resources already discovered in the Stabroek Block. These costs which must be repaid by Guyana in accordance with the 2016 Production Sharing Agreement (PSA) must be reviewed through the audit process to ensure the country was not billed for items or services outside of that which was agreed.

A consortium was hired by the People’s Progressive Party (PPP) administration to undertake a second audit of the company’s expenses incurred between 2018 and 2020 is still to be finalized. The auditors were tasked with reviewing the costs racked up by the company, amounting to some US$7.3 billion.

To date, the Government of Guyana (GoG) has approved five developments for the Stabroek Block. These carry a price tag of about US$40 billion which Guyana must scrutinize to make sure it is not being over charged.

Low told Kaieteur News that with the reduction of the costs from US$214 million to US$3 million, Guyanese are now left to fear what may be the outcome of the audits yet to be undertaken.

He said, “With this audit controversy, oil companies must be wondering whether they can potentially bypass the Guyana Revenue Authority and Guyana’s laws.”

The Economist pointed out that with the British auditor flagging over US$200 million in costs as questionable from the US$1.6 billion exploration costs, Guyana could expect inflated costs amounting to billions of US-dollars from future audits.

More importantly, Low noted that failure by the government to contest those costs or to allow a reduction from the oil companies can deprive the country of much-needed revenue to boost the quality of lives for its citizens.

He added, “Accurate audits are vital to ensure Guyana can project revenue and therefore service its debts as well as deliver on development goals.”