Arbitration initiated over Chevron's $53 billion acquisition of Hess

Key Takeaway
Exxon and Cnooc initiate arbitration against Chevron's $53 billion acquisition of Hess, citing a right of first refusal on Hess's 30% stake in Guyana's Stabroek Block.
The dispute, to be decided by the International Chamber of Commerce in Paris, underscores the competitive and strategic significance of Guyana's oil reserves.
Outcome could reshape partnership dynamics within the oil industry, highlighting Exxon and Cnooc's efforts to protect their interests in lucrative Guyanese fields.
Arbitration Case Unfolds
Exxon Mobil Corp. has initiated arbitration against Chevron Corp. over Chevron's proposed $53 billion acquisition of Hess Corp. This legal move puts into question Chevron's strategy to enter Guyana's Stabroek Block, where Hess holds a 30% stake. Exxon, owning 45% of Stabroek, alongside Beijing-based Cnooc Ltd. with a 25% stake, argue they have a right of first refusal over Hess's share. This dispute, rooted in a contract over a decade old, could potentially disrupt Chevron's significant deal. Exxon's Senior Vice President, Neil Chapman, emphasized their understanding of the contract's intent, stating, "We understand the intent of this language of the whole contract because we wrote it."
Industry Implications
The arbitration, to be decided by the International Chamber of Commerce in Paris, highlights the competitive nature of the oil industry, especially concerning the lucrative Guyanese oil fields. The outcome could significantly impact partnership dynamics within the sector, with both Exxon and Cnooc challenging Chevron's acquisition. This case underscores the strategic importance of the Stabroek block, known for its multibillion-barrel crude treasure, and reflects the broader market's interest in Guyana's oil reserves. The dispute has introduced uncertainty into Chevron CEO Mike Wirth's tenure, emphasizing the high stakes involved.