Tsvetana Paraskova
Following the completion of Chevron’s acquisition of Hess Corporation, the U.S. supermajor will need to overcome a previously strained relationship with its biggest competitor at home, ExxonMobil, and work together as joint venture partners in the hottest oil province in the world, Guyana’s offshore oil treasure trove.Chevron’s foray into the fastest-growing exploration and production spot globally could also be a sign of what’s to come for the biggest international oil and gas majors. Big Oil may be looking to acquire smaller companies with prized assets to boost reserves amid lower spending on exploration within the industry over the past five years.
For Chevron, the acquisition of Hess, whose completion was announced last week, means the supermajor is now gaining 30% in Guyana’s Stabroek offshore block—where the operator ExxonMobil is leading the production of more than 660,000 barrels per day (bpd) from several projects in the block.Chevron’s deal was finalized after a more than a year-long arbitration battle initiated by Exxon, which challenged the Chevron-Hess deal, claiming it had a right of first refusal for Hess’s stake under the terms of a joint operating agreement (JOA) for the Stabroek block. Hess and Chevron claimed the JOA doesn’t apply to a case of a proposed full corporate merger.
The arbitration case has reportedly strained the relationship between the top executives of the two biggest U.S. oil firms.In the legal fight, Chevron had much more to lose than Exxon because Guyana’s resources were the key reason for pursuing Hess Corp, more than the reason for adding producing assets in the Bakken shale basin in North Dakota.With the arbitration ruling in favor of Chevron, the company announced the completion of the Hess acquisition, “following the satisfaction of all necessary closing conditions, including a favorable arbitration outcome regarding Hess’ offshore Guyana asset.”
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