Coming soon






& Tobago




Very usefull links



The Global Barrel

Tiempo Culural

Gustavo Coronel


Le Blog des
Energies Nouvelles

News Links




Dow Jones



Views and News






Guyana Govt. should audit Guyana's Exxon projects
Liza 1, 2 & 3 before approving 4th project—OGGN


The Liza Unity, Floating Production Storage Offloading vessel.

By Kaieteur News

Petroleumworld 11 22 2021

The Oil and Gas Governance Network (OGGN), a diaspora group, is accusing the ExxonMobil-led consortium operating in the Stabroek Block of inflating its Field Development costs for the Liza 1 and 2 developments by some 25 percent or some US$2.4 billion.

Additionally, the group charges that before the government approves anymore projects such as Yellowtail, the fourth project, it should ensure the auditing and verification of the first three oil projects in the Stabroek Block are completed.”

To this end, the OGGN in alluding to the government’s announced promise to audit the US$9.5 billion in capital costs—outside the audit window that is now closed—noted that “it (Government) hasn’t explained how it will enforce any discrepancies found given the timeframe to audit Liza 1 and Liza 2, the first 2 projects in the Stabroek Block, have expired.”

According to OGGN, if “we consider the history of the US$460 million pre-contract costs audit, then the outlook for the audit of the US$9.5 billion in capital costs appears bleak. Chris Ram (local chartered accountant) in May 2018 raised serious concerns about the pre-contract costs for the Stabroek Block. He used the oil companies’ own financial statements to show the pre-contract costs were overstated by at least 25 percent or US$92 million.”

It was pointed out that it then took about 19 months for the government to hire a UK firm, IHS Markit, in December 2019 to start the audit.

As such, OGGN observed, “it is now November 2021, and the results of the pre-contract costs audit have still not been released. It has been 3.5 years from when legitimate concerns were raised about pre-contracts cost and we still don’t have any answers.”

According to OGGN, the capital cost of Liza 1 is US$3.5 billion, and Liza 2 is US$6 billion for a total of US$9.5 billion.

Notably, it was observed that the Liza 1 capital cost was originally stated at US$4.4 billion and after concerns were raised in the media by Dr. Jan Mangal and others it dropped to US$3.7 billion before settling at US$3.5 billion. According to OGGN, that “is an initial overstatement of about 26 percent.”

Additionally, it was observed that the breakeven cost for the Liza 2 oilfield is US$25 per barrel but Liza 1 breakeven cost is US$35 barrel. To this end, it was noted that on a per barrel basis, Liza 2 capital cost is US$10 per barrel and Liza 1 per barrel capital cost is US$7.78.

OGGN has since noted that “given these different breakeven costs, one would have expected Liza 2 capital cost to be lower than Liza 1…Not to mention that on the second project, Liza 2, one would expect the oil companies to be more efficient given the lessons they would have learnt from the first project.”

According to the local oil and gas stakeholder, “if we apply the per barrel capital cost of Liza 1 to Liza 2, we see Liza 2 is about 29 percent more expensive.”

The group noted therefore, that this is a red flag that should have triggered an urgent response to initiate an audit.

Additionally, OGGN iterated that from its outlined scenarios, it appears that the oil companies may be padding their costs by at least 25 percent. The grouping has since posited, “…if we apply a 25 percent padding to the US$6 billion capital cost of Liza 2, then was it padded by US$1.2 billion.”

Similarly, “if we also apply the 25 percent to US$9 billion capital cost for Payara, was it padded it by US$1.8 billion; that would be total padding of US$3 billion which is about 2 times the cost of Guyana’s annual budget.”

As such, OGGN is calling on the government to release the audit of the US$460 million pre-contract costs immediately. Additionally, OGGN said the government should state publicly when it plans to begin the audit of the US$9.5 billion in capital costs of Liza 1 and 2 and when this process is expected to be concluded.

The group has also requested of government to provide additional information, such as who will conduct the audit.




Editor & Publisher:Elio Ohep /
Contact Email:

CopyRight © 1999-2021, Elio Ohep A. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2021, Petroleumworld   / Elio Ohep - All rights reserved

This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.