Guyana state official accused of illegally reducing ExxonMobil oil expenses

Guyana’s government Friday said it has identified the state official who illegally watered-down expenses for ExxonMobil from $214 million to a mere $3 million without authorization during an audit of offshore operating expenses.

The expenses are to be borne by the CARICOM nation as the cost of producing offshore oil on behalf of the country. Minister of Resources Vickram Bharrat said he was at a loss to determine how the official arrived at such a paltry figure, letting the American supermajor off the hook at the country’s expense.

The two had for the past four years been at loggerheads about operating expenses with activists and opposition parties accusing the company of fudging figures and passing on dubious expenses to Guyana as cost oil.

The minister said that Senior Petroleum Coordinator Gopnauth Gossai had no authority to deal directly with Exxon and that he will be disciplined. It is unclear whether he will be dismissed or transferred to another state agency. The current audit had to do with expenses by the company dating back to 1997 when it was merely surveying the basin and up to 2017, two years after it had declared a world class offshore find and two years before it commenced actual oil production.

“After examining all the facts it is clear that Mr. Gossai acted without the requisite authorization to engage Exxon and provided inadequate advice and as such, I have asked the permanent secretary to take the necessary disciplinary measures. I wish to restate that the position of the government of Guyana today remains consistent with its original position that the only authority to make a final determination is the Guyana Revenue Authority,” Minister Bharrat said in a statement.

He said the GRA had maintained its stance that the figure in question was $214 million and that the government had left it up to the revenue agency to be the sole and final authority in determining the final outcome of any oil audit so officials remain bewildered at the position taken by Gossai.

Exxon is the main operator of the prolific Stabroek Block near the Suriname border. The area has already produced more than 35 successful wells. About 400,000 barrels of oil are being produced daily from two oil fields. Payara, a third, is being primed for initial production in mid-November.

The audit of expenses is important as these will be included in what is referred to as cost oil, allowing Exxon and consortium partners Hess Corporation of the US and CNOOC of China to deduct up to 75 percent of revenues for production and other operating expenses. The remaining 25 percent is split at 12.5 percent each between Guyana and the partners in addition to a mere two percent royalty, an arrangement which has caused much angst in the country.

In the wake of the fiasco, Minister Bharrat says new systems and oversight will be put in place to avoid “a repetition of this lapse in the future. Staff members will be advised to make full disclosure with all contact and sharing of information with stakeholders.”