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Hess-Chevron deal still subject to Guyana’s agreement
Dear Editor,
This week, U.S oil giant Chevron purchased Hess Corporation, one of the joint venture partners in Guyana’s Stabroek Block. The deal is said to be valued around US$53 billion.
While it is unclear as to when Hess Corp will submit a Farm Out or Assignment of Interest request to the Minister responsible for Petroleum in Guyana, it is clear that Hess’ stake in the prolific Stabroek Block was of primary consideration during the negotiation of the sale to Chevron.
Under Guyana’s law, and the Production Sharing Agreement for the Stabroek Block, change in the participating interest in an area subject an Exploration or Production Licence, requires approval by the Minister Responsible for Petroleum. The now repealed Petroleum (Exploration and Production) Act, 1985 was heavily focused on exploration and contained elementary guidance to the Minister in approving or disallowing a transfer of interest.
Unlike the Trinidad legal regime, which provides detail guidance on this process such as a parent company guarantee, the Petroleum Activities Act of 2023 passed by the Parliament of Guyana, made little efforts to correct this lacuna in the law. The consequence is that the Minister, in the absence of legal standard to guide him, must rely on industry practice, and not unreasonably withhold his approval, even where Chevron refuses to continue the carbon credit commitment made to the government by Hess Corp.
The Ministry of Natural Resources, and the Office for Climate Change in the Office of President in Georgetown, is expected to press Hess Corp (the assignor) and Chevron (the assignee) to continue the commitment given by Hess Corp to purchase carbon credits from the Government of Guyana as part of its efforts to fight climate change.
Regards,
Kevin Morgan
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