Exxon Mobil CEO Darren Woods clarified the company’s position regarding its dispute with Chevron over Hess Corporation’s assets in Guyana. Woods emphasized that Exxon is not seeking to acquire Hess itself, but rather establish preferential rights over Hess’ stake in the Stabroek oil block, a key asset in the multi-billion dollar deal.
The dispute centers on a disagreement over the interpretation of a joint operating agreement governing the consortium responsible for Guyana’s oil production. Exxon claims this agreement includes a right of first refusal on any partner’s stake, potentially giving them leverage to block Chevron’s $53 billion acquisition of Hess.
Exxon Prioritizes Establishing Precedence
Woods highlighted Exxon’s primary objective as securing its contractual rights. “We’re basically standing up for what we believe is a fundamental right,” he told Reuters. “We’re trying to secure and confirm the rights the contract gives the existing partners.”
Chevron and Hess disagree with Exxon’s interpretation of the agreement, and the document itself remains confidential. This lack of transparency has complicated negotiations and delayed the potential closing of the Chevron-Hess deal, previously estimated for mid-2024.
The Stabroek block, located offshore Guyana, is the heart of the controversy. Exxon currently holds a 45% stake, with Hess and China’s CNOOC as minority partners. However, the Stabroek block’s significance lies in its massive oil reserves, making it the crown jewel of Chevron’s bid for Hess.
Exxon does not rule out the possibility of acquiring Hess’ entire 30% stake in the Stabroek block, which would give them a commanding 75% control. However, Woods outlined a three-stage decision-making process.
First, Exxon seeks to establish its preemptive rights over Hess’ assets. Second, they would determine the value of those assets in collaboration with partners. Finally, Exxon would evaluate the financial implications of acquiring a larger share in the block.
Finding Common Ground and Reaching a Resolution
While acknowledging Hess’ desire for a swift resolution, Woods expressed Exxon’s commitment to facilitating a speedy outcome to the preemption rights dispute. He also acknowledged the uncertainties surrounding the timeline for a final decision, with estimates suggesting a potential five to six-month arbitration process.
Determining the value of Hess’ stake in the context of Chevron’s acquisition presents another hurdle. Woods anticipates complex negotiations, stating, “There will be, you know, a lot of discussion that happens between the parties.”
Despite the current disagreement, Woods emphasized Exxon’s intention to maintain a constructive relationship with Chevron, highlighting their ongoing partnerships across the globe. “This is a business issue,” he concluded. “We are going to be a constructive force as we work to get to the right answer.”
The outcome of this dispute has significant implications for the future of Guyana’s oil production and the balance of power among these energy giants. While challenges remain, all parties involved seem determined to reach a commercially viable solution.
Source: Reuters
