Exxon Mobil Corp. today filed for arbitration to retain its preemption rights over Hess Corp.’s stake in a giant offshore oil development in Guyana, threatening Chevron Corp.’s $53 billion deal to buy into the field, Bloomberg reported.
Exxon filed for arbitration this morning in the International Chamber of Commerce in Paris, senior vice president Neil Chapman said at a conference hosted by Morgan Stanley. Chevron’s deal to buy Hess amounts to circumventing Exxon’s pre-emption rights, Chapman said.
Reuters had last week reported that ExxonMobil had said it may exercise pre-emptive rights that could block Chevron from acquiring a 30% stake in a giant Guyana oil block, the centerpiece of its rival’s US$53 billion deal to buy Hess.
The largest U.S. oil producer’s aim could be to get Chevron to raise its commitments to the capital-intensive Stabroek block, which contains at least 11 billion barrels of oil, or to make some other concession elsewhere, analysts and investors said, according to Reuters.
The two largest U.S. oil producers are both rivals and partners in projects around the world.
Exxon is “very possibly looking to extract a pound of flesh from Chevron to support the deal proceeding,” MKP Advisors said in a note. “It is very possible they want greater commitments from Chevron than Hess has previously signed up to”, Reuters reported.
Exxon operates all production in Guyana with a 45% stake in the consortium and Hess and China’s CNOOC as its minority partners.
Exxon and CNOOC believe the right of first refusal applies, the U.S oil producer said in a statement, as they owed it to their investors and partners “to realize the significant value we’ve created and are entitled to in the Guyana asset.”
