ICC to appoint expert to determine deadlock over US$214.4M Exxon cost claim

The International Court of Arbitration of the International Chamber of Commerce (ICC) has been tasked with appointing a sole expert as efforts continue to resolve the dispute between the Guyana Government and ExxonMobil over a US$214.4 million cost oil claim.

This is according to Minister of Natural Resources Vickram Bharrat, who told The Guyana Dialogue programme on Thursday that the ICC will now move to appoint the sole expert.

Minister Bharrat explained that the ICC will select a sole international expert to examine the disputed expenses after the two parties failed to agree on an appointment.

“The two parties couldn’t agree on a sole expert, so now we’ve asked the International Chamber to identify and select one from a pool of international experts,” Bharrat said.

The expert will examine the expenses to determine whether the US$214 million should be removed from the cost bank or whether some of the expenses can be verified as petroleum-related.

Bharrat said the process is now at the stage where the ICC will identify the expert, who will begin work once selected.

In 2019, British firm IHS Markit conducted an audit of ExxonMobil Guyana’s oil cost expenses incurred between 1999 and 2017 from its operations in Guyana and flagged US$214.4 million as questionable costs.

Following its own review, the Guyana Revenue Authority (GRA) – the technical body tasked with advising the Government on audited oil expenses – issued a no-objection in 2023 to the British firm’s recommendation that the cost bank be adjusted accordingly.

Section 1.5(b) of Annex C to the 2016 Stabroek Block Petroleum Agreement, signed between ExxonMobil and the then A Partnership for National Unity/Alliance For Change (APNU/AFC) Government, allows for the submission of disputes concerning the audit to expert determination within sixty days of being informed of the final position.

Since last year, the Government had indicated that it would initiate the process to recover the disputed cost oil claim. Both sides subsequently agreed to activate the provision for a sole expert, as enshrined in the PSA. A sole expert is an established dispute-resolution mechanism used to resolve disagreements over cost recovery claims.

But the Guyana Government and ExxonMobil have been unable to decide on a sole expert to mediate and make a determination on the possible repayment of the sum. Both sides have proposed candidates for the role but have rejected each other’s nominee.

Reports indicate that ExxonMobil’s preferred candidate previously carried out contractual assignments for the company, raising concerns about a potential conflict of interest.

ExxonMobil Guyana’s President Alistair Routledge had previously indicated that if negotiations to select a sole expert proved unsuccessful, the parties would have to approach the ICC’s International Court of Arbitration to appoint a third-party expert.

The International Court of Arbitration, which was established by the International Chamber of Commerce (ICC), is an institution for the resolution of international commercial and  business disputes.

Meanwhile, even as the two sides are attempting to settle this first audit, there are two more oil audits of Exxon’s expenses in Guyana.
In the second audit, conducted by a consortium of local and international firms led by VHE Consulting, US$7.2 billion in expenses incurred between 2018 and 2020 was examined. Of this amount, US$65.1 million was not accepted by the Government.

Moreover, the third cost oil audit, also done by VHE Consulting, covering the period 2021 to 2023, was completed and submitted to the Government.