Chevron’s Hess buyout threatened by rival oil giants

Chevron disclosed on Monday that its proposed US$53 billion (RM252 billion) acquisition of fellow American firm Hess could be at risk if the control of a key oil asset is successfully challenged by rival petroleum giants.

Chevron acknowledged in a securities filing that there is a scenario where Hess “would remain an independent company”, while adding it does not believe “there is any material likelihood” of such an outcome.

The issue concerns Hess’s 30% stake in the Stabroek Block offshore Guyana, a mammoth oilfield that was a driver of the takeover.

Stabroek is operated by US giant ExxonMobil, which has a 45% stake.

Chinese company Cnooc holds the remaining 25% of the project.

The existing operating agreement has a provision that allows existing partners – ExxonMobil and Cnooc – a “right of first refusal” to purchase the Guyana asset.

Chevron and Hess, both American multinational energy firms, do not believe the right applies “due to the structure of the merger” and the language of the Stabroek partnership, said the Chevron filing.

However, after the Chevron-Hess agreement was announced in October, ExxonMobil and Cnooc notified Chevron that they disagreed.

“Hess, Chevron, Exxon and Cnooc have been engaged in constructive discussions regarding the Stabroek (terms) and Chevron and Hess believe these discussions will result in an outcome that will not delay, impede or prevent the consummation of the merger,” Chevron said, adding that it or Hess could pursue arbitration if these talks do not yield an agreement.