Guyana oil: beyond tensions with Venezuela, a US “civil war” is developing between Exxon and Chevron
Exxon has filed a request for arbitration regarding its right of first refusal to acquire Hess Corp.'s interests in the Stabroek block, offshore Guyana, where the two companies have made a series of oil discoveries, triggering a a sort of civil war between Exxon and Chevron, both multinationals with stars and stripes, for the conquest of Guyana's oil. The same oil that is also in international dispute with Venezuela.
Guyana's oil is proving to be a great promise, and a huge mess
The move is the latest update in what appears to be an escalation of problems between Exxon, the majority shareholder of the Stabroek Block, and Chevron, which last year reached a deal to acquire Hess Corp. primarily for his holding of this company right in Guyana.
In October Chevron struck a deal to buy Hess for $53 billion, aiming to gain a major position in Guyana's huge offshore oil resources. The oil major said Exxon's pre-emption rights under the joint operating agreement do not apply to the ongoing merger with Hess because, at least on the surface, it is a merger, not an acquisition. However
“We are absolutely confident that we have pre-emptive rights within this contract, and we have filed for arbitration to make sure we can secure those rights,” Neil Chapman, a senior vice president at Exxon, said at an event on Wednesday, as reported from the Financial Times.
“The pre-emptive rights give us the opportunity to assess the value, which we can then match if we decide to do so,” Chapman said, hinting that Exxon could make a counteroffer for Hess Corp's assets in the Stabroek block, which, however, will start from the value offered by Chevron and, at least, will equal it.
Exxon first invoked its right of first refusal on these assets earlier this year, while Hess Corp. and Chevron responded that these clauses were not relevant because the agreement between Hess and Chevron did not cover the assets of Hess in Guyana but the entire company.
“The right of first refusal is not applicable to the merger. We are fully committed to the transaction and do not believe the ROFR or these discussions will prevent its successful completion,” Chevron and Hess said in a joint statement in late February.
The dispute highlights how valuable the Stabroek Block is to oil majors amid declining new discoveries. Since the Exxon-led consortium first struck oil in the 6.6 million-acre Stabroek block, the three companies, including China's CNOOC, have recorded more than 30 oil discoveries worldwide which contain over 11 billion tons of oil.
In short, Guyana's oil is among the most disputed in the world in every sense, also because production has practically gone from zero to 700 thousand barrels in a very short time and will rise to 1.3 million barrels by 2027. A wealth that tempts many, too many entities.
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The article Guyana's oil: beyond tensions with Venezuela, a US "civil war" develops between Exxon and Chevron comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/petrolio-della-guyana-oltre-le-tensioni-con-il-venezuela-si-sviluppa-una-guerra-civileusa-fra-exxon-e-chevron/ on Thu, 07 Mar 2024 11:33:27 +0000.