OGJ -- ExxonMobil files for arbitration in Chevron-Hess Guyana dispute ........................
Oil & Gas Journal
March 6, 2024
ExxonMobil files for arbitration in Chevron-Hess Guyana dispute
‘We understand the detailed language because we wrote it,’ senior vice president Neil Chapman said of the right of first refusal provision that could stop Chevron’s $53-billion deal for Hess.
By Geert De Lombaerde
ExxonMobil Corp. on Mar. 6 filed to have an arbitrator rule on the details of the joint operating agreement governing its work with Chevron Corp. and Hess Corp. in the Stabroek block offshore Guyana.
Chevron and Hess leaders last fall announced a deal to have Chevron pay $53 billion for Hess. ExxonMobil officials claim they have a right of first refusal to match the value assigned to Hess’ 30% non-operated interest in the ExxonMobil-operated Stabroek block (which also includes China National Offshore Oil Corp.) and potentially increase their stake.
Chevron recently said the right of first refusal provision doesn’t apply to its Hess acquisition plans and noted that a ruling to the contrary would torpedo the planned combination (OGJ Online, Feb. 29, 2024).
Speaking at a Morgan Stanley conference Mar. 6, ExxonMobil senior vice-president Neil Chapman said the company has asked the International Chamber of Commerce to arbitrate the disagreement, which he said is a process that could take up to 6 months. Not going to arbitration, he said, “would be incomprehensible” because of the embedded present and future value of the Stabroek project.
“It’s a fiduciary responsibility to shareholders,” Chapman said.
While noting that he can’t get into contract language specifics, Chapman told the Morgan Stanley audience that the Stabroek JOA is based on industry standards and added that the ExxonMobil team feels strongly that an arbitrator will rule in its favor.
“We understand the detailed language because we wrote it,” he said. “We’re extremely confident in our position that pre-emption rights exist under this contract.”
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