Chevron says takeover of Hess 30% stake in Stabroek Block good for everyone

Mar 28, 2024 ExxonMobil, News, Oil & Gas

Michael Wirth, Chairman and Chief Executive Officer (CEO) of Chevron Corporation

Kaieteur News – Michael Wirth, Chairman and Chief Executive Officer (CEO) of Chevron Corporation, an American oil giant, recently stated that the US$53 billion acquisition of Hess Corporation, another American oil company, has benefits for everyone, including Guyana.

Chevron is facing legal challenges from U.S oil giant, ExxonMobil Corporation and China’s CNOOC, over Guyana’s prolific Stabroek Block– which Chevron would gain access to Hess’ prized asset, holding a 30% interest in the block. Situated in the northeastern offshore region of Guyana, the Stabroek Block boasts water depths ranging from 1,600 to 2,000 meters. The Stabroek Block is one of the largest exploration discoveries globally in recent years. During the recently concluded CeraWeek in Houston, Daniel Yergin, Vice Chairman of S&P Global and Wirth were engaged in a conversation.

Yergin probed Wirth about Chevron’s merger with Hess, expressing curiosity about the company’s perspective on recent developments. Wirth, responded, “Look, a couple of things. Number one, this transaction is an important one. It’s good for Chevron shareholders. It’s good for Hess shareholders. It’s good for the country of Guyana. I think it’s good for US energy security. Good for the industry. So we think it’s an important deal and a good deal.”

Exxon is the operator of the Stabroek Block with a 45% interest and CNOOC holding 25% stake in the asset. The block-partners have moved to arbitration at International Chamber of Commerce in Paris to assert their rights over Hess’ shares in Guyana’s golden oil field.

Moreover, Wirth revealed that Chevron had made efforts to engage with the Stabroek Block partners in a constructive manner for several months. He expressed surprise at the block partners’ sudden decision to pursue arbitration. Chevron’s CEO continued, “We did extensive diligence on the joint operating agreement during the negotiation of the contract, we have extensive experience with these types of agreements around the world, as does Hess. And we remain very confident in our understanding of the language and look forward to seeing it affirmed in arbitration.”

Moreover, Exxon announced the discovery of oil in 2015 and swiftly moved to commence production activities by December 2019. Production from the Stabroek Block developments sits above 600,000 barrels per day (bpd) – with Exxon having the Liza 1, Liza 2 and the Payara projects online. The oil companies have embarked on an aggressive drilling campaign in the Stabroek Block targeting three other developments: Yellowtail, Uaru and Whiptail projects. It should be noted that Yellowtail and Uaru have already been approved, while Whiptail is under review awaiting government approval any day now. The Stabroek Block witnessed a remarkable discovery in 2023 with the unveiling of the Lancetfish field, located in ultra-deepwater and deep-sea layers. Lancetfish field is one of the eight discoveries made by Exxon in the Stabroek Block, since 2022, and according to CNOOC holds an estimated reserve of 746 million barrels of oil. According to disclosures by the operator, the block has accumulated over 30 new discoveries, with a total estimated recoverable resource volume of approximately 11 billion barrels of oil equivalent.