GRA to begin dispute resolution with Exxon over expenses

GEORGETOWN (Reuters) – Guyana’s Natural Resources ministry has ordered the country’s tax agency to begin a dispute resolution with Exxon Mobil over the recovery of some $214 million in expenses registered by the U.S. oil major.

Expenses reported by Exxon as part of its operations at the massive Stabroek offshore block are closely monitored because a consortium led by the U.S. major can take and export up to 75% of the crude it produces as “cost oil”, while Guyana’s government is entitled to half of the remaining barrels.

The government has followed mechanisms included in the contract to have the expenses audited by external consultancy firms and determine if they were correctly reported.

The ministry’s request follows the completion of an audit by U.S.-based consultancy IHS Markit covering expenses in the 1999-2017 period, which was reviewed by the government.

“The Guyana Revenue Authority provided to the ministry a ‘no objection’ to IHS’ recommendation to adjust the cost bank by $214.4 million. This position remains unchanged and clear, and Exxon was so advised,” the ministry said in a release.

Exxon did not immediately reply to a request for comment.

By the end of January, the Exxon-led consortium, which controls all oil and gas output in Guyana, had recovered $33.9 billion of the $41.1 billion spent in the area, the country’s Vice President, Bharrat Jagdeo, told Reuters last week.

A second audit ordered by the government to firm VHE Consulting covering expenses from 2018 to 2020 is still ongoing, the ministry said, adding that Exxon replied on its initial findings and VHE is now reviewing the response.