Guyana to finally audit Exxon’s operating costs

Guyana map with discoveries lines, September 2020.

Guyana’s government has finally commissioned a local and Denver, Colorado-based firm to audit and verify billions of dollars spent by American supermajor ExxonMobil and its consortium partners for their lucrative offshore operations but experts and critics say the four-month time frame is way too tight to do a proper job.

Ramdihal, Haynes and Eclisar Financial, Vitality Accounting will partner with Denver-based Martindale Consultants to validate and review all operating costs and bills the Texas-based petroleum behemoth[BW1]  has submitted between 2018-20 amounting to billions of dollars associated with the Liza-1 oil field and related operations.

The award of the auditing contract comes amid a raging row as to whether the company has set aside enough insurance and other funds in the event of an offshore oil spill for its current operations bearing in mind the billions required to clean up after spills and to compensate victims.

The local environmental agency has said it can work with proposals from the company to set aside $600 million for each offshore project but rights and other groups have pointed to the costs of other oil spills around the world including British Petroleum’s 2010 spill in the Gulf of Mexico that surpassed $50 billion in various payments.

Exxon, through its local subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), is producing about 350,000 barrels daily from two oil fields but it has already won approval for two others, Payara and Yellowtail which will be the largest to date with a projected 55 wells being in operation when production starts in the next three years.

Minister of Natural Resources, Vickram Bharrat told reporters this week that the findings will be made public but he backed the ability of the partnering firms to complete the audit in four months given the scope of work.

“We consulted with the companies before we actually set a time frame. It wasn’t done by the ministry in isolation. We would have consulted with them and this is the time that they are comfortable with. It’s a time frame that we are comfortable with too, as well as the international companies who are involved, and they will be working dedicatedly on the audit for the next four months.”

Former local EPA head Vincent Adams disagreed with the time frame, contending that it is not only inadequate in addition to the fact that oil and gas production are so news to Guyana that Guyanese firms are unfamiliar with the sector and what is required to conduct a proper audit.

“This is a public relations stunt as a big company like Exxon is controlling everything. Government is just conducting the audit to tick off a box amid the criticisms it is getting about its handling of the industry.”

In late 2019 Guyana became one of the world’s newest oil producers when first oil was poured at the Liza-1 field about 120 miles north of the coast. The Guyana-Suriname Basin where Exxon, Spanish-based Repsol and other companies are exploring for sweet light crude is being billed as one of the most prolific as the success drilling rate is above 80 percent in relation to attempts, a feat Exxon and partners Hess Oil of the US and China’s National Offshore Oil Corporation have bragged about in recent months.

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