GRA sets up Special Unit to audit Exxon operations

first_imgBy Jarryl BryanThe Guyana Revenue Authority (GRA) has announced that its Oil and Gas Unit (O&G Unit) is up and running in preparation for ExxonMobil beginning commercial production of oil in 2020.While this conforms to the necessary measures identified in a key internationalGRA Commissioner General, Godfrey Statiareport, there is still the matter of training.During a press conference on Thursday, GRA Commissioner General Godfrey Statia was questioned about the status of the unit. He related that specialized training will soon be provided for its staff — something overseas counterparts are assisting with.“It has actually been established; but what has happened (is that) we have to train persons in the oil and gas sector. Oil and gas accounting is unique in Guyana; it has not been looked at, so our staff is being trained by the Overseas Technical Assistance (programme) of the Internal Revenue Service (IRS),” Statia explained.He also explained that the GRA has secured the services of trainers from the United Kingdom (UK) in addition to those from the International Monetary Fund (IMF). As part of Guyana’s bilateral ties, some of the staff will also undergo oil andExxon’s operations in the Stabroek Blockgas training in Trinidad and Tobago, he explained.Asked about the size of the staff complement, Statia related that only 23 persons would be operating in the unit. He urged, however, that the public be cognizant of the authority’s role, and noted that GRA is avoiding overstaffing the unit.“GRA is only the revenue arm of the Government, and you have to look and see what would be the function of the Petroleum Commission and all these other things,” Statia said. “Because, depending on the make-up of the Petroleum Authority, you would know what role each person would play. But we have been ahead of the game,” he confided.“We have started looking at these activities since a year ago, and we have some staff that have been trained to look specifically at the oil and gas activities. There are certain timelines (involved). For instance, audit must be commenced within a two-year period and all these other things,” Statia related.IMFIn a report done on the oil sector last year, the IMF had urged the Guyana Government to start as soon as possible auditing all exploration and development costs being racked up by ExxonMobil.When he presented the 2018 budget last year, Finance Minister Winston Jordan had alluded to the impending establishment of an Oil and Gas Unit at the GRA. The IMF had said establishment of this unit should become a priority of the Government.“It will be important for this unit to start verifying and undertaking audits of cost incurred during the exploration and development phase, which is getting underway now. It would be advantageous to establish close working relations between the GRA and the sector regulators, to ensure that the limited petroleum sector expertise in Government is applied most efficiently,” the IMF had stated in its report.InvestmentsThe Stabroek Block is 6.6 million acres. Esso Exploration and Production Guyana Limited is the operator, and holds a 45 per cent interest in the Stabroek Block. Hess Guyana Exploration Ltd holds a 30 per cent interest, and CNOOC Nexen Petroleum Guyana Limited holds a 25 per cent interest.Since ExxonMobil’s 2015 oil find in Guyana, the country has attracted international attention and this has precipitated intense sensitization exercises. In May 2015, Exxon confirmed that more than 295 feet of high-quality oil-bearing sandstone reservoirs were encountered at its Liza 1 exploration well.To give an idea of the company’s total investment, Exxon has put the Liza Phase 1 project costs at over US$4 billion. It is estimated that the lease capitalization cost alone for the Floating Production Storage and Offloading (FPSO) vessel is US$1.2 billion.The company subsequently found oil in the Liza 2, Liza 3, Payara, Turbot 1 and Ranger 1 wells. It has also started drilling in its Pacora well, with additional drilling planned for this year.Guyana will have to audit and verify cost oil claims Exxon will make on its revenue. Exxon is expected to use revenue from its production in order to recoup its capital investment. Whatever remains of this is the ‘profit oil’ Guyana will have to split with the oil company and its associates.last_img read more