Exxon Is Sure It Has Right Of First Refusal In Spat Over Guyana Oil Assets

By Julianne Geiger - Mar 22, 2024

Exxon has “strong feelings” that it is right in its view of the right-of-first-refusal provision in its spat over oil assets in Guyana, Exxon Senior Vice President Jack Williams told Bloomberg on Friday—in part because it wrote the contract governing the project.

Exxon has accused Chevron of trying to get around the right of first refusal provision by merging with Hess Corp—a deal that would hand Chevron Hess’s 30% stake. Chevron has argued that the right of first refusal doesn’t apply to mergers.

Hess and Exxon—and China’s CNOOC, which has also moved to arbitrate the deal against Chevron—have a joint operating agreement that dictates the terms for all consortium members.

Exxon said the dispute will make for an “interesting arbitration”, but pointed out that since they wrote the provision themselves, they’re pretty sure they know the intent behind it.

Exxon balked after Chevron announced it would merge with Hess, arguing that it was owed a chance to purchase its JV partner’s mouthwatering stake in the Guyana deepwater oil block known as Stabroek. Exxon did say, however, that it was not interested in purchasing Hess as a whole—just that it wanted to establish rights over Hess’s assets in Guyana specifically.

Exxon currently operates and owns 45% of the block.

The arbitration case against Chevron could last as many as 6 months. “We have built into that contract a remedy, which is to take it to an arbitration, so we’re just going to exercise that remedy, and let an impartial panel decide who’s right, whose interpretation is right. And so we’ll just let that play out,” Williams said.

Hess, Exxon, and CNOOC announced yet another oil discovery last Friday, known as Bluefin, adding even more to the attraction of Hess’s Guyana assets.