GRA’s false declarations scandal: ExxonMobil cuts ties with brokers, taking steps to avoid reoccurrence

The content originally appeared on: INews Guyana
ExxonMobil Guyana President Alistair Routledge

Days after reports emerged that the Guyana Revenue Authority (GRA) had flagged false declarations on oil well equipment imported on behalf of ExxonMobil, the oil giant has said that it has cleared up the discrepancies, cut ties with the broker and improved their internal systems.

A few days ago, it was reported that the GRA had flagged false declarations made by a Trinidadian logistics company that acted as the broker on oil well equipment imported for ExxonMobil. The report indicated that the company submitting the declaration, listed US$4.4 million worth of oil well equipment, as US$12.1 billion.

During a press conference at their headquarters on Tuesday, ExxonMobil Guyana President Alistair Routledge was asked about this. According to him, steps have already been taken to clear up the discrepancy.

“It was corrected for the customs. And they’ve received that. The GRA has the correct number. Everything was caught early and there were no issues. Nobody suffered any loss. Everything was taken care of. And as I said, we’ve updated our procedures and the checks that are made to make sure this sort of error is not repeated.”

Asked whether any court matter has been filed against ExxonMobil, Routledge noted that the company is yet to receive any summons. He further detailed the corrective measures the company has taken and also revealed that they have changed brokers in the wake of the controversy.

“We have not received any court summons or documents. We are always committed to working ethically, and correctly and making sure all our submissions, be they for tax purposes or cost recovery, are accurate. We actually do what we call a business practices review, every two years, with all our employees.

“If there is something that there shouldn’t have been, then we will learn from that. We’ve already revisited the procedures around those submissions. As you may also be aware, the company that is supporting us for those customs duties has changed. So, we don’t anticipate that kind of issue happening again. But we’ll learn and make sure we put in place everything we can to not have errors.”

Routledge explained that their business practices review ensures that employees understand the company’s expectations around reporting accurately, doing business correctly and avoiding conflicts of interest with the business interest. According to the executive, very clear expectations are set in these reviews.Meanwhile, Routledge clarified that the import duties ExxonMobil pays do not go directly into cost recovery. Rather, it is the equipment itself that is considered part of expenses by the company.

“What happens for duty submissions to the GRA, those numbers do not directly go into what we state in the cost recovery. Part of the many mechanisms we have around paying invoices or submitting custom duties.”

“There are millions of transactions that take place every year in our business. The equipment being imported would be part of the expenses, but that number, you wouldn’t find that erroneous number in the expenses,” Routledge added.

While reports had alluded to the controversy as a false declaration, Exxon has maintained that it was a typographical error that caused the worth of the equipment to be overstated in November of last year. In response to a March 18 letter from GRA asking it to show cause why proceedings should not be instituted against it, Exxon had also committed to working along with GRA to address any further concerns on the matter.

ExxonMobil, through its local subsidiary Esso Exploration and Production Guyana Limited (EEPGL), has a majority 45 per cent interest in the Stabroek Block, and is the operator; while Hess Corporation holds a 30 per cent interest, and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds the remaining 25 per cent interest.ExxonMobil, along with its co-venturers, commenced production activities in the Stabroek Block in December 2019. Currently, production has been ramped up to over 600,000 barrels of oil per day at the Liza Phases One and Two, as well as the Payara projects, all of which account for the three floating, production, storage and offloading (FPSO) vessels operating in Guyana’s waters offshore.

The current production figures will be further buttressed by the Yellowtail and Uaru developments, which are already underway and are anticipated to contribute 250,000 barrels of oil each following their respective start-ups in 2025 and 2026. Additionally, Whiptail, which was only recently approved, will further contribute to these production numbers when it gets underway in 2027.