Exxon single sourced hundreds of US-millions in contracts -Auditreportreveals

administration, to specifically review the expenses of oil major,

ExxonMobil between the period1999and2017,tothe tune of US$1 6 billion, found that hundreds of USmillions in contracts were single sourced by the company

According to the document which has been shared with this newspaper, “Vendorspendovertheaudit period amounts to a total of $1,067 million, of this, procurementdetailsfor$953 million or 89% relate to contractsandinvoicing.”

A revision of the contracts conducted by the audit team found that US$613 5 million or 64 percentofthevalueofthose reviewed contracts were awarded on a competitive basis and are aligned with the provisions of the 2016 Production Sharing Agreement (PSA) However, 25 percent of the value-US$240millionwere single sourced and 11 percent -US$99 5 million were partial single source contracts.

The audit report stated, “For the procurement and award of contracts conducted on a competitive basis, the procurement process provides adequate transparency to meet the PSArequirements.”

It noted, “Of the single source procurement awards, E E P G L h a s n o t d e m o n s t r a t e d t h e competitiveness of the rates within the contract for contracts with a combined value of $28,476,876. This amount should be removed fromtheCostBank.”

TheAuditfirmwashired to review of all exploration and development costs submitted for recovery by

ExxonMobil Guyana Country Manager, Alistair Routledge

Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), between 1999 to the end of 2017 in the Stabroek Block. The total expenditure that has been amounts to $1,677,774,727.

Following reports on the documentbyanothersection of the media, the Guyana Revenue Authority (GRA) issuedastatementindicating that the said report is not final.

Be that as it may, the single sourcing of major contracts by ExxonMobil goes against the Stabroek Block contract; the agreement which the government maintains must be adhered to. In refusing to renegotiate the contract to securebetterfiscaltermsfor thecountry,governmentsaid it must adhere to the

‘sanctity of contract’ principle.

In the meantime, its 50/50 partner has been flagged for single sourcing contracts worth USmillions.

Notably, Article 18 of the agreement requires Exxon to establish tender proceduresinitsconductof petroleum operations, allowing Guyanese to p a r t i c i p a t e w h e r e necessary

Article 18.2 of the PSA states:“TheContractorshall establish appropriate tender procedures for the acquisition of goods, materialsandserviceswhich shall ensure that Guyanese suppliers and SubContractors are given adequate opportunity to compete for the supply of goodsandservices.”

Guyanese yet to see oil...

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Personnel and Subcontractors shall have an obligation to disclose any situation of actual or potential conflict that impacts their capacity to serve the best interest of the Client, or that may reasonably be perceived as having this effect. Failure to disclose said situations may leadtothedisqualificationof the Consultant or the terminationofitsContract.”

K a i e t e u r N e w s previously reported that Aramco Trading Limited (ATL), the London-based trading subsidiary for the State controlled Saudi Aramco, had inked a one year contract with the MinistrytomarketGuyana’s crude entitlement from the

LizaPhaseOneProject.That contract came to an end in October2022andwasnever releasedforpublicscrutiny

According to the EITI Standards of 2019, as it r e g a r d s c o n t r a c t s

“Implementingcountriesare required to disclose any contracts and licenses that are granted, entered into or amended from 1 January 2021 Implementing countries are encouraged to publicly disclose any contracts and licenses that providethetermsattachedto the exploitation of oil, gas andminerals.”

It goes on to point out that countries must also provide: “An overview of whichcontractsandlicenses are publicly available Implementing countries should provide a list of all activecontractsandlicenses, indicating which are publiclyavailableandwhich are not. For all published contracts and licenses, it shouldincludeareferenceor linktothelocationwherethe contract or license is published. If a contract or license is not published, the legal or practical barriers should be documented and explained.”

Guyana is among more than 50 countries that have committed to strengthening t r a n s p a r e n c y a n d accountability of their e x t r a c t i v e s e c t o r m a n a g e m e n t b y implementing the EITI Standard The country signed on to this pact on October25,2017.