This week, a private arbitration panel in London began hearing a dispute between ExxonMobil and Chevron over rights to one of the world’s richest oil projects.
The Stabroek block off Guyana’s coast holds an estimated 11 billion barrels of oil discovered by ExxonMobil, Hess Corp, and China’s CNOOC. The offshore field, which started production five years ago, now produces more than 660,000 barrels per day. ExxonMobil operates the project with a 45% share, Hess owns 30%, and CNOOC holds 25%.
The conflict arose after Chevron made a $53 billion offer to buy Hess in 2023. This deal would give Chevron Hess’s assets in North Dakota’s Bakken and its 30% stake in Guyana’s oil block, a highly profitable asset with major growth potential.
Exxon says production in Guyana could exceed 1.7 million barrels per day, reaching 1.3 million by 2030. The company also notes that Guyana is now the third-largest oil producer per capita in the world.
The Stabroek block is very profitable, with a breakeven price near $30 per barrel. As production grows, so do revenues for the consortium partners.
Exxon and CNOOC challenge Chevron’s bid, arguing they have the right of first refusal under a joint operating agreement (JOA) for the block. Hess and Chevron counter that the JOA does not apply to a full corporate takeover.
This disagreement led to arbitration, souring the previously friendly relationship between the top executives at Exxon and Chevron, according to sources cited by The Wall Street Journal.
The arbitration has delayed Chevron’s acquisition of Hess for more than 18 months. The three-judge panel started hearings behind closed doors on Monday. A decision is expected within 90 days after the hearings conclude, possibly by August or September.
While Chevron’s Hess deal stalls, Exxon recently closed a $60 billion acquisition of Pioneer Natural Resources, strengthening its position in the Permian Basin. This growth, alongside Guyana’s offshore development, helped Exxon exceed analyst expectations in its first-quarter earnings.
Both companies are confident in their legal positions, but Chevron risks more if it loses the arbitration.
The outcome depends heavily on how the panel interprets the joint operating agreement, especially the section on pre-emptive rights, sources told the Financial Times.
For Chevron, the stakes are high. It seeks to gain a strong foothold in Guyana’s booming offshore oil basin, which is set for major production increases in the coming years.
Chevron’s reserves replacement ratio—the measure of new reserves added versus those produced—has fallen below 100% in recent years. This means Chevron is using up its reserves faster than it can replace them.
The company has boosted production in Kazakhstan and launched new output at the Ballymore oil project in the U.S. Gulf of Mexico. But it views Guyana as a key growth opportunity with high volumes and profits.
In 2023, ExxonMobil, Hess, and CNOOC earned a combined $6.33 billion net profit from Guyana’s offshore operations, according to government data. Hess’s share was $1.88 billion, even before new platforms came online after 2023. The consortium’s net profit margin of 56% that year exceeded tech giant Nvidia’s 49%.
Wood Mackenzie estimates that the Stabroek partners could earn as much as $182 billion from Guyana’s oilfields over the next 15 years.“Guyana is one of the most prized oil and gas projects on the planet,” analyst Luiz Hayum told the Financial Times.
He added that the project was developed at record speed, offers relatively low-emission oil, and has a break-even cost below $30 per barrel, making it extremely profitable.
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