China National Offshore Oil Corporation (CNOOC) has initiated arbitration proceedings to assert its rights over Hess‘ stake in the Stabroek oilfield in Guyana in the event of a sale to Chevron, reported Reuters.
This move follows similar action by ExxonMobil as the companies dispute the terms of their joint operating agreement.
CNOOC filed the arbitration application on 15 March, as confirmed by CNOOC’s board of directors secretary, Xu Yugao, during an earnings briefing.
“We have a joint operating agreement with partners regarding the Stabroek block. We will deal with relevant issues based on the relevant arbitration terms,” Xu was quoted as saying.
The dispute arises amidst negotiations between Exxon and Chevron regarding Exxon’s claim to a right of first refusal on any sale of the Stabroek block, which is one of the largest oil discoveries in recent years.
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ExxonMobil Guyana is currently operating the block with a 45% interest, while Hess Guyana Exploration and CNOOC Petroleum Guyana hold 30% and 25% stakes, respectively.
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By GlobalDataThe Stabroek block off the coast of Guyana is estimated to contain at least 11 billion barrels of oil and is central to Chevron’s proposed $53bn acquisition of Hess.
Hess and Chevron have voiced their disagreement with Exxon’s interpretation of the joint operating agreement.
The Stabroek field is expected to yield more than 1.2 million barrels of oil and gas per day by 2027.
Chevron has indicated that the merger with Hess hinges on the resolution of this dispute and could be jeopardised if it remains unresolved.
The arbitration process is expected to take several months, potentially delaying the merger’s expected mid-year completion.
If the deal collapses, Hess would be liable to pay Chevron a break-up fee of around $1.7bn.
For his part, ExxonMobil’s CEO, Darren Woods, has stated that the company’s intent is to enforce its rights and not to acquire Hess outright.
Should Exxon establish its preferential rights, it would then evaluate the value of Hess’ assets with its partners and consider increasing its stake to 75%.
Woods highlighted that acquiring Hess’ share would be the last step in a three-stage process and did not rule out the possibility of an offer for some or all of Hess’ stake.
