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Exxon Files for Arbitration Over Guyana Oil Block

Exxon has filed for arbitration on the issue of its rights to first refusal to acquire the stake of Hess Corp. in the Stabroek Block offshore Guyana where the two made a string of oil discoveries.

The move is the latest update in what seems like escalating problems between Exxon, the majority stakeholder in the Stabroek Block, and Chevron, which last year struck a deal to acquire Hess Corp. mostly because of its Guyana stake.

“We’re absolutely confident that within this contract, we have pre-emption rights, and we have filed for arbitration to make sure that we can secure those pre-emption rights,” Exxon senior VP Neil Chapman said at an event Wednesday, as quoted by the Financial Times.

“The pre-emption rights are to give us the opportunity to look at the value, which we can then match should we choose to do so,” Chapman also said, suggesting Exxon may make a counter-offer for Hess Corp’s assets in the Stabroek Block.

Exxon first invoked its first-refusal right to those assets earlier this year, with Hess Corp. and Chevron countering that these stipulations were not relevant because the deal between Hess and Chevron was not about Hess’s Guyanese assets but the whole company.

"The right of first refusal provision 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 in an environment of dwindling 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 booked more than 30 world-class oil discoveries containing more than an estimated 11 billion barrels of oil resources.

By Irina Slav for Oilprice.com


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