Category: The Road to First Oil

Every man, woman and child must become oil-minded 

Column # 178

Column Title: The Exxon Audit Dispute: Two Fundamental Errors

One of the last substantive reports carried by Stabroek News before the company entered liquidation dealt with the continuing dispute between the Government of Guyana and ExxonMobil over the appointment of a Sole Expert to determine the US$214 million in costs questioned in the IHS Markit audit. Normally, this is precisely the type of issue I would address in my regular column in that newspaper. Two fundamental issues arise from the report: how disputed audit issues are to be resolved in the absence of agreement, and where responsibility lies for the audit provided for in the Agreement.

With Stabroek News no longer available, I will address these and future matters in this personal blog, available for free use by any person with due attribution. For purposes of continuity, I will treat this as column 178.

Resolving audit issues

The Agreement itself sets out a clear process for dealing with disputes arising from the audit allowed under the 2016 Agreement. The audit is conducted on behalf of the Government under the authority of the Minister responsible for petroleum. Once the audit is completed, the Minister communicates its findings to the Contractor, identifying those costs that are questioned or disallowed and inviting a response within the prescribed time frame. During that period the parties exchange correspondence and attempt to reconcile any differences. Only if those efforts fail does the dispute move to the next stage.

That stage is the appointment of a Sole Expert.

The report suggests that ExxonMobil is insisting on the appointment of a particular expert. The Agreement simply does not allow this. The Sole Expert must be appointed by agreement between the parties, and if the parties cannot agree within the specified period after notice proposing the appointment, the appointment is to be made by the International Chamber of Commerce in accordance with its Rules for the Appointment of Experts and Neutrals.

In other words, neither party has the right to impose its own nominee. The requirement that the expert be independent and impartial makes it all the more troubling if the individual proposed by one side has previously carried out assignments for that same party.

The second error is the Government’s apparent decision to place responsibility for the audit in the hands of the Guyana Revenue Authority. That approach conflates two entirely different legal regimes.

The GRA is by statute required to administer the tax laws, including carrying out a tax audit. The audit under the Agreement is not a tax audit. It is a contractual audit carried out under the Petroleum Agreement. Article 23 expressly gives the Minister the right to audit the accounting records of the Contractor relating to petroleum operations in accordance with the Accounting Procedure set out in the Agreement.

To place the GRA at the centre of the present dispute blurs a distinction that should be obvious. The audit under the Agreement is the responsibility of the Government acting through the Minister responsible for petroleum. It is that authority which must assert the Government’s position and defend its findings under the Agreement.

But the Government and President Ali seem afraid to speak to Exxon as a sovereign power. President Irfaan Ali recently hosted senior ExxonMobil executives at State House at public expense. President Ali must understand that the company is frustrating the audit process by attempting to dictate the choice of Sole Expert. He should have used the opportunity to state Government’s position plainly: that ExxonMobil must respect and conform with the terms of the 2016 Petroleum Agreement.

The two issues ultimately are ultimately one of institutional responsibility. The State signed the Petroleum Agreement. It the State, acting through the Minister responsible for petroleum, that must assert and defend its rights under that Agreement. Those responsibilities cannot be outsourced or quietly shifted to another agency simply because the Government is afraid to displease Exxon.

The Government must use the provisions of the Agreement without fear or favour. Anything less risks reinforcing the perception that the Ali Administration is too weak and scared to represent the national interest.

Every man, woman and child must become oil-minded Part 176

On 27th October 2017, a gentleman who I had never met asked, through a third party, to see me. It was unusual but I thought why not. After exchanging brief pleasantries, he disclosed that the 2016 Petroleum Agreement signed by the APNU-led Coalition included a signature bonus that had never been made public. There had been no announcement, no disclosure to Parliament and no explanation to the people of this country. In Every Man, Woman and Child Must Become Oil-Minded – Part 27 – December 15, 2017, I recorded that the press confirmed the existence of the bonus after a letter surfaced from the Finance Secretary to the Governor of the Bank of Guyana with the caption “Signing Bonus granted by ExxonMobil – Request to open Bank Account.”

The official response was that the signing bonus was a figment of my imagination. A couple months later, vindication came in the form of a letter from the Finance Secretary to the Governor of the Bank of Guyana to place the money in a special account. In Column # 28 of my Oil and Gas column, I referred to the “final, belated and reluctant admission” of the US$18 million signing bonus. Transparency did not produce the truth; exposure did.

That pattern has returned. Column # 175 published on 7th. February of this year addressed a statement made by ExxonMobil’s Chief Executive Officer during a shareholders’ call explicitly suggested that Exxon would benefit from force majeure conditions affecting Guyana’s operations. The column pointed out that invocation of force majeure could extend the duration of the 2016 Stabroek Production Sharing Agreement. There was no explanation, confirmation, clarification, denial, or engagement. Just silence. 

We now know why.

Two nights ago, I was heading to dinner with an international attendee to the current Petroleum Conference which was opened on Tuesday by President Ali. I almost lost control of the vehicle when the individual advised – with total certainty – that the Government had granted ExxonMobil a second Force Majeure under the 2016 Agreement. There was also an extensive force majeure period under the 1999 Agreement that at best was only partly justified. Then we had COVID-19 force majeure under the 2016 Agreement and now this latest secretive case. The Agreement provides for an application and meetings to discuss the consequences of the Force Majeure and would not usually be granted by the Government lightly, since strict conditions must apply: Article 24 of the 2016 Agreement, which has six paragraphs.

Force majeure freezes obligations and extends the life of the Agreement, the amazing benefits, including Guyana paying the oil companies’ taxes and issuing certificates to confirm that those taxes were paid by the companies.

Like the APNU, the PPP/C has not announced this important development nor informed the people whose birthright – and that of generations unborn – our natural resources are. It was done secretly. And once again, Guyanese did not learn of it from their own Government. They had to learn it from foreigners.

A material decision affecting this country’s most valuable natural resource has surfaced not because the Government respected the public’s right to know, but because information emerged from outside. It is an insult to Guyanese that foreign shareholders of foreign companies are better informed than they are. Sovereignty may reside in Guyana; its alienation takes place elsewhere.

The 2016 Agreement was signed under the APNU+AFC Coalition. It was criticised immediately for its low royalty, its generous cost oil ceiling, its incredible tax provisions, locked in for six decades, “under a stabilisation clause which I previously described as ‘more explicit and iron clad preventing the government from any unilateral increase of the oil company’s obligations or the diminution of its rights’”

Not unfairly, APNU was accused of haste, poor judgement and much more. It signed what it did not fully understand. The PPP/C cannot plead these in their defence. In opposition, now President Irfaan Ali and former President Bharrat Jagdeo said Guyanese should “weep” over the contract. Mr. Jagdeo accused the Coalition of “selling out” the country, coded language for betrayal of the national interest. The PPP promised review. It promised renegotiation. It promised better contract administration. It campaigned on competence and experience.

Now, it defends, preserves and extends the very same Agreement.

Force majeure is not administrative tidying. It suspends obligations, shields against default and can extend contractual duration. Extending the Agreement beyond 2057 locks Guyana into terms once condemned, effectively until the oil is depleted and nothing remains to renegotiate. That is not correction. It is consolidation.

This Government knew the contract, condemned it, promised to fix it. , and has now extended it beyond 2057 – effectively until the oil is gone and we are left to deal with the consequences. That is no error. It is a deliberate decision to lock the country into terms once described as surrender.

And this is unfolding while President Ali tells an energy conference which opened Tuesday last about Guyana’s role as a global model of sustainable development, high tech infrastructure and economic diversification. Alas, model development is not stage lights and speeches. It will be determined by what the Government does with the Agreement. Allowing Exxon to get everything it wants – incomplete audits, variation of associated gas provisions, and even implied unilateral variation through its Head Office practices – is not governance

These however, pale in relation to the secretive extension of the Agreement while the country is asked to applaud fancy speeches, panel discussions and photo-ops. This is not leadership. It is theatre – and Guyanese are treated with open disregard.

Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 175

Introduction

Today’s column concludes a two-part piece arising from comments made by ExxonMobil’s Chief Executive Officer during the company’s fourth-quarter earnings call. When Darren Woods spoke of force majeure “pausing the clock,” he was addressing shareholders and the wider investment community, not the Government of Guyana, a regulator, or an arbitral tribunal.

That context matters. In describing Guyana’s offshore acreage as something Exxon can count on “in the short term and in the longer term,” Woods was signaling future opportunity and growth. Guyana’s petroleum resources were being presented as deferred value — assets temporarily unavailable but nonetheless expected to be realised. In practical terms, Guyana’s natural resources were being used to support ExxonMobil’s forward-looking narrative to American and international shareholders.

What makes that possible is not bravado. It is experience.

Poor history

Guyana’s past treatment of force majeure has been notably permissive. On previous occasions, force majeure has been accepted by the Guyana authorities under expansive and accommodating conditions, with little public explanation and no visible demonstration of strict scrutiny. The practical effect has been repeated extensions of time, prolonged retention of acreage, and the suspension of contractual obligations without a corresponding showing that performance was genuinely prevented.

Over time, that practice shapes expectations. When force majeure is treated as something that can be obtained by request rather than established by proof, it ceases to be exceptional. It becomes routine. Contractors learn that delay carries limited cost and that contractual clocks can be paused with minimal resistance. In such an environment, it is hardly surprising that force majeure is spoken of as an advantage rather than an excuse.

But as we said last week, force majeure is not self-proving, and it is not unilateral. The determination lies with the Government of Guyana, subject to the dispute-resolution and arbitration mechanisms provided for in the Agreement. Where that determination is approached loosely or informally, the legal balance of the contract shifts from the Government.

But Woods is clever. He knows that statements made on international earnings calls shape analyst reports, investor expectations, and perceptions of future reserves. When Guyana’s petroleum acreage is publicly framed as future opportunity awaiting activation, it implicitly assumes State acquiescence. Silence or passivity by the Government in such circumstances risks being interpreted as confirmation.

Government must act

This is why the Government should not treat force majeure as a purely technical footnote. Once it is publicly invoked in a manner that carries market implications, the Government has a duty to engage. Engagement does not require confrontation, but it does require clarity: clarity that force majeure is not automatic; clarity that it is not indefinite; and clarity that it does not confer a future option over national resources.

That duty to engage is heightened by the Government’s own repeated reliance on sanctity of contract as the reason for refusing renegotiation of the 2016 Agreement. That principle cannot operate selectively. If the Agreement is to be respected, it must be enforced in full – including the limits it places on force majeure. Liberal accommodation today undermines contractual discipline tomorrow.

It also weakens Guyana’s position over time. Each unexamined extension – or non-relinquishment or partial relinquishment – becomes precedent in practice, even if not in law. Each accommodation reinforces the perception that even simply asking is more than sufficient. That perception, once entrenched, is difficult to reverse.

None of this is to deny that force majeure may arise in genuine cases. It can. But the history of permissive application explains why force majeure is now spoken of as a benefit to be managed rather than a disruption to be overcome. That is not where Guyana’s petroleum governance should be.

Conclusion

This issue now sits squarely with Cabinet. Continued silence or routine accommodation is no longer neutral; it carries legal and governance consequences. Once force majeure is asserted, the Government’s response becomes an administrative decision affecting public resources and is therefore subject to scrutiny. A history of permissive treatment does not protect such decisions; it weakens them. Cabinet cannot credibly invoke sanctity of contract while allowing force majeure to function as a default extension mechanism.

The choice is between reasserting contractual discipline now, or defending it later under judicial review.

Every man, woman and child must become oil-minded

Introduction

On 31 January 2026, Stabroek News carried a story that exposes how surreptitiously Exxon seeks to draw every drop of blood – sorry, oil – from Guyana. The report once again brings the issue of force majeure sharply into focus.

Force majeure is a contractual mechanism intended to grant additional time where performance has been genuinely and adversely affected by defined events beyond a contractor’s control. Speaking during ExxonMobil’s fourth-quarter earnings call, the company’s Chief Executive Officer, Darren Woods, stated that portions of the Stabroek Block remain under force majeure because of the Guyana–Venezuela border controversy, adding that one of its advantages is that it “pauses the clock” until the affected acreage becomes accessible.

Force majeure 

In recasting force majeure not as an inability to perform, but as a benefit derived from delay, the formulation matters. But the statement is even more dangerous. First, it ignores Guyana’s permanent sovereignty over its own resources. Second, it treats force majeure not as a temporary legal cause for non-performance, but as a mechanism for preserving future access to Guyana’s petroleum acreage. The language assumes continuity of entitlement, subject only to timing. The sheer arrogance of Exxon and its disregard of the 2016 Petroleum Agreement, of which force majeure is an integral part. 

This concept which traces its origin to the law of contract, is narrow and exceptional, applying only where an event is beyond the reasonable control of one party to an agreement is unable to meet his performance obligations because of an event – an “act of God” – not reasonably foreseen at the time the agreement was signed which genuinely prevents the performance of contractual obligations. It is not designed to suspend contractual time while a contractor waits for more favourable political or legal conditions. That is part of the risk of contracting.

Force majeure is not self-proving and is certainly not unilateral. While one party may assert it, that party does not determine force majeure. Neither Exxon nor its Chief Executive Officer is the arbiter. The determination lies with the Government of Guyana, subject to the Agreement’s dispute-resolution and arbitration provisions.

Questions

Measured against that standard, Exxon’s own account raises questions. The controversy over Guyana’s western border is neither new nor unexpected. It predates the 2016 Agreement by two centuries and was widely known internationally long before Exxon applied for the blocks which it now claims are subject to force majeure. Those blocks formed part of the geopolitical risk environment against which the investment decision was made. Let us not forget that Texas bullied the GGMC team into signing the Agreement. 

Foreseeability matters. A risk that is long-standing and openly acknowledged at the time of the contract cannot later be repackaged as force majeure simply because its resolution has been delayed or its consequences have become inconvenient. Remember too, that devious Exxon partly financed the ICJ case in the matter, in the form of a signing bonus which they and the Coalition sought to conceal.  

Conclusion

Under Guyana’s constitutional and international law framework, including the principle of permanent sovereignty over natural resources, access to petroleum acreage is not suspended property awaiting reactivation by any private contractor. It remains subject at all times to contractual compliance and lawful State decision-making. Force majeure does not confer a future option over national resources; it merely exempts performance where strict conditions are proved to have been met.

Having chosen sanctity of contract over sovereignty, the Government will have to explain why it would now not enforce the Agreement. That principle cannot now be applied selectively. Sanctity of contract means enforcing the Agreement as written, including the limits placed on when performance may be excused.

Whether those limits have been met in the present case is a question that cannot be answered by assertion or optimism of Exxon. It requires careful, independent scrutiny by the State.

Every Man, Woman and Child in Guyana Must Become Oil-Minded (Column 171)

Introduction

Readers will recall Column # 170 dealing with the request by three U.S. senators to ExxonMobil seeking information on the company’s tax arrangements under the 2016 Petroleum Agreement. Their direct concern is whether the U.S. treasury is subsidising Exxon’s operations in Guyana to the benefit of CNOOC, one of Exxon’s Chinese partners in the Stabroek Block.

Ever since that letter was made public, interest in the issue has intensified – both abroad and in Guyana. At a press conference held at the Exxon’s new Guyana Headquarters in suburban Ogle, hosted by ExxonMobil Guyana’s President Alistair Routledge – sporting the Guyana Arrowhead – the local media, sensing a story that finally had a Washington connection, pressed for answers.

To a question whether Exxon would provide the information sought by the senators – and long sought by the media in Guyana – Routledge was his typical evasive self. “We haven’t applied any tax credits. We are working with the GRA on paperwork on taxes,” Routledge said – an insult to the intelligence of every Guyanese or person of any intellect. That single sentence has opened a window into what may be the most brazen accounting fiction in the country’s history. Unless there is an intent to cook up something, the claim is neither accurate nor credible. It masks a structure so distorted that even its defenders cannot explain.

Before we analyse his response however, let us look at another statement that is blatantly misleading – that the company continues to be cash flow negative on a cumulative basis. Was Routledge unaware that in 2024, the branch distributed some $674,454 Million and still ended the year with more funds than at the beginning of the year? 

No credit

Back to the press conference and Exxon’s and its tax practices. Unsurprisingly, Routledge tried to dismiss the drawn-out controversy as the product of paperwork. But what paperwork, he did not say. The Agreement could not be clearer. The Minister pays. The GRA issues the receipt. The obligation is discharged. That is the entire mechanism. There is no “working on paperwork.”

There is only doing it or concealing it. If, six years after first oil, the parties are still fumbling with “paperwork,” it means either the Agreement has not been executed as written or it has been executed but hidden. Either way, it is a national embarrassment.

Accounting credit

While Routledge performs confusion in public, the financial statements of ExxonMobil Guyana Ltd., Hess Guyana Exploration Ltd., and CNOOC Petroleum Guyana Ltd. tell a different story – they are all taking the credit.

ExxonMobil Guyana Ltd. (2024) reports: “Revenue includes non-customer revenue of G$260,155.7 million … relating to Article 15.4 of the Petroleum Agreement,” and recognises a matching income-tax expense. That is the classic gross-up accounting technique: record fake revenue and fake tax so the books look balanced.

As for Hess Guyana Exploration Ltd. (2024), its financial statements disclose that “A portion of gross production … is used to satisfy the branch’s income-tax liability and is recognised as sales revenue.” The Government’s oil becomes the company’s “revenue” and its “tax.”

As for the junior, non-American Chinese partner, CNOOC Petroleum Guyana Ltd.’s financial statements go even further, stating that “The Minister accepts the appropriate portion of the Government’s share of profit oil as payment in full of the Contractor’s income-tax liability.” That language does not reflect Article 15, which requires the Minister to pay the tax to the Commissioner-General of the GRA – not merely to “accept” oil.

Amazingly, in a matter as important as this, none of the companies thought it useful, let alone necessary, to disclose this little inconvenient fact.

The black hole

In all three cases the same pattern appears: the companies book the tax as paid, recognise it as revenue, and enjoy the credit. What happens thereafter is the black hole where Mr. Routledge wants to take us, despite the clear language of Article 15 of the Agreement: The Minister must pay to the GRA the tax charge of the oil companies out of Guyana’s share of oil, is said to pay, the GRA is to issue receipts and deliver “proper tax certificates in the Contractor’s name”.

Article 15 states that the tax must be paid from the Government’s share of oil revenue. Where, then, is the evidence of that payment? The Natural Resource Fund shows no deduction, no debit, no outflow. But no one – including the NRF investment committee and the auditors – seem to care a hoot.

In effect, the tax exists only in the companies’ ledgers — not in Guyana’s public accounts. A phantom transaction generates a real benefit to the contractors, while the Government works on a certificate for a payment it never made.

Confusion

This confusion is not accidental. The Government’s failure to manage the Agreement – or even to understand its workings – has produced a system in which no audit has been completed, no receipts have been verified, and no public officer can explain the basic arithmetic of the contract.

The Commissioner of Information, who falls under the Office of the President, has ignored lawful requests for disclosure. The Minister of Natural Resources has neither published the tax receipts nor accounted for the debits from the Government’s share of profit oil. And nothing coming out from the Guyana Revenue Authority, to suggest that it has received the taxes “paid on behalf of the contractor”. This is the contract that is so sacred that it even trumps the country’s sovereignty, public officials’ integrity and most of all, the President’s thundering commitment to review and renegotiate”.

Even a cake shop, run on a basic exercise book and a lead pencil, would manage its accounts with more care than this trillion-dollar industry. The result is a charade: a government pretending to pay, companies pretending to be taxed, and auditors pretending not to notice.

Next week we will leave Georgetown for Houston, Texas and New York, where the parent companies of Hess and Exxon grapple with the accounting equivalent of the three-card trick outside of Demico House.