Guyana takes Exxon to court over incorrect equipment values

(Bloomberg) — Guyana’s tax authorities are suing Exxon Mobil Corp. in court after one of the company’s suppliers said it improperly inflated the value of oil well equipment by a factor of 200 to about $12 billion.

The Guyana Revenue Authority has summoned the oil giant and according to Commissioner General Godfrey Statia, a hearing is scheduled for May 10.

Exxon and Ramps Logistics, a Trinidad-based company, said the overvaluation resulted from an administrative error in which the amount was expressed in U.S. dollars instead of Guyanese dollars. A Guyanese dollar is worth about half a US cent.

The error was “caught early” and “no one suffered any loss,” said Alistair Routledge, Exxon’s country manager. The company has updated its procedures to ensure this is not repeated, he said.

Under Guyana’s production sharing contract with Exxon, the government receives its share of production only after costs are deducted, making accurate statements critical to the country’s oil revenues. Exxon recently approved its sixth development that will help double production capacity to 1.3 million barrels per day by 2027.

“We are now ensuring that before we complete the second audit, the GRA will go back and check all the old invoices from the past years to see that there is no exaggeration,” Guyana Vice President Bharrat Jagdeo said on Thursday at a new conference. .

Exxon has agreed to comply with the audit.

Ramps called the error “unfortunate” and said it would be resolved.

“It was a mistake,” Chief Operating Officer Shaun Rampersad said in an interview Friday. “There have been some issues in the system, and it’s something we’d like to work with them on.”

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