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Jagdeo boasting about Chevron’s worldwide assets for Guyana despite deal yet to be finalised
Vice President, Dr. Bharrat Jagdeo and Chairman and Chief Executive Officer (CEO) of Chevron, Mike Wirth
Kaieteur News – Although the deal for Chevron to acquire Hess Corporation is yet to be finalized, Vice President Bharrat Jagdeo has already set his eyes on the assets of Chevron to potentially be leveraged in Guyana for other purposes, including responding to an oil spill.
The Vice President at his weekly press conference on Thursday told reporters, “So I am pleased that you acknowledge that the assets we have here are significantly higher and could be utilized for other purposes.”
He was at the time responding to a question posed by this publication. Kaieteur News noted that foreign companies like Chevron have been boasting about higher returns for their shareholders from “Guyana’s world class assets” and asked the VP what he can boast about for the Guyanese people who own the resources.
In response, Jagdeo bragged about the assets that Chevron Corporation wants to acquire from Hess Corporation.
“I hope that you heard what I said last week about market valuation so since Chevron confirmed that it is the Guyana assets they were after, that is US$60 billion dollars [that is] the total valuation of their shares, the Hess shares,” Jagdeo said.
On October 23, 2023 Chevron announced that it entered into a definitive agreement with Hess Corporation to acquire all of the outstanding shares of Hess in an all-stock transaction valued at US$53 billion. The total enterprise value, including debt, of the transaction is US$60 billion.
The Vice President explained, “The bulk of that [Hess’ assets] comes from Guyana, so maybe 50 of the US$60B comes from Guyana, so if 30 percent of the company is worth US$50B you can imagine what the total company is worth now in the market. That is how the market values this…that is what they are traded at.”
To this end, he noted that these assets could therefore be utilized for “other purposes”.
The subject of the company’s assets were raised following concerns of stakeholders that Guyana would have to foot the cost of a spill, since the operator of the Stabroek Block, ExxonMobil Guyana Limited does not have assets in the country to handle a spill.
It must be noted too that oil companies operating in Guyana are only subsidiaries and a vast majority of the assets in the country have already been paid for by Guyana or are currently being financed by this country, through cost recovery.
In fact, the former Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams in response to the VP’s comments said that the politician wants to sell Guyana’s assets to cover the costs of a spill.
On the other hand, Jagdeo had also acknowledged that some of the assets were being leased by the company, after this was raised by Kaieteur News. “Exactly”, Jagdeo said while adding, “And I pointed this out about the leasing if they lease assets it won’t be available to us so you have to discount for all of those”.
Nevertheless, Jagdeo is still positive that even if Guyana cannot get all of the foreign company’s assets, a substantial amount will still remain for Guyana in addition to the US$2B ExxonMobil oil spill guarantee that Guyana is still to see evidence of, and a US$600M insurance.
Meanwhile, as Jagdeo continues to bank on the US multibillion assets that Chevron wants to buy from Hess the two companies are still to finalize a deal.
While the oil company is optimistic about the Hess deal, it must now iron out differences with its major competitor, ExxonMobil, the operator of the Stabroek Block with a 45% stake.
The two American companies are at loggerheads over the Hess deal which may head to arbitration. ExxonMobil had stated its intention to potentially pre-empt Chevron’s acquisition of the stake, which forms a crucial component of its deal with Hess. The disagreement centers on Exxon’s assertion of a right to first refusal regarding any sale of the Stabroek block.
Kaieteur News had reported that Chevron, in a securities filing, cautioned that the dispute could jeopardize its US$53 billion deal for Hess. Should the deal collapse, Hess might face a breakup fee of US$1.7 billion.
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