Exxon, Cnooc merge arbitration claims against Chevron

Exxon Mobil Corp. and Cnooc Ltd have merged arbitration claims against Chevron Corp.’s proposed takeover of Hess Corp. that would allow the US oil supermajor to enter Guyana’s Stabroek Block, Bloomberg reported yesterday.

The unified arbitration was approved after a March 26 application, according to a Hess letter to stockholders included in a Chevron a regulatory filing on Thursday. Exxon and Beijing-based Cnooc, which own 45% and 25% of Stabroek, respectively, argue they have a right of first refusal over Hess’s stake in the block.

“Chevron and Hess believe that ExxonMobil’s and CNOOC’s asserted claims are without merit,” according to the filing, Bloomberg reported. Hess “intends to vigorously defend its position in the arbitration proceedings and expects the arbitration tribunal will confirm that the Stabroek ROFR (Right of first refusal ) does not apply to the merger.”

Bloomberg said that the dispute over a contract written more than a decade ago is unprecedented in the modern history of Big Oil and threatens to upend Chevron’s US$53 billion deal to buy Hess. In the filing, Hess noted that Exxon published a statement in October “indicating its support” for the deal before reversing course six months later.

Hess voiced confidence in winning the arbitration case “based on the express terms of the Stabroek” contract, it said. Exxon has accused Chevron and Hess of attempting to “circumvent” the contract, which is private.

“We understand the intent of this language of the whole contract because we wrote it,” Exxon Senior Vice President Neil Chapman said on March 6, according to Bloomberg.