Chevron-Hess Merger Clears Major Hurdle as ICC Rules in Favor of Hess

Texas-headquartered energy giant ExxonMobil and its partner, China’s CNOOC, have not secured a victory in arbitration proceedings over U.S.-based Hess Corporation’s sale of interests in assets off the coast of Guyana. This clears the key merger hurdle in Chevron’s path, enabling it to bring Hess’ upstream portfolio into its fold.

In the aftermath of the first offshore discovery in 2015, Guyana came into the limelight as the world’s fastest-growing oil region, thanks to the exploration success on the Stabroek block, covering 6.6 million acres or 26,800 square kilometers, which is operated by ExxonMobil (45% interest), with partners, Hess Guyana Exploration (30%) and CNOOC Petroleum Guyana (25%).

Once Chevron’s $53 billion all-stock deal to acquire Hess Corporation became public knowledge in October 2023, ExxonMobil and CNOOC, Hess’ partners in the Stabroek block, took steps to prevent the sale of assets in Guyana by filing cases before the International Chamber of Commerce (ICC) in March 2024.

The companies justified their move by citing a right to a first refusal over any sale of the U.S. player’s 30% interest in Guyana’s oil-rich offshore block under the existing joint operating agreement. As a result, the arbitration proceedings delayed the Chevron-Hess merger, dragging the business combination closure date into 2025.

However, the duo still managed to make inroads in progressing the merger by securing Hess stockholder approval and clearing the Federal Trade Commission (FTC) antitrust review. Both players were adamant that preemptive rights in the Stabroek block joint operating agreement, which were used as a reason to launch the arbitration, do not apply.

The FTC recently reopened and set aside the January 2025 final consent order that prohibited Chevron from nominating, designating, or appointing John B. Hess, Hess’ CEO, to its board of directors, concluding that maintaining the restrictions on Hess’ employment would damage the FTC’s credibility and undermine its mission. The vote approving the petition to reopen and set aside the order was 3-0.

The International Chamber of Commerce Tribunal has now issued a ruling in favor of Hess in the contractual dispute between the company and its partners in Guyana, ExxonMobil and CNOOC, over interests in the Stabroek block.

In response to the ICC’s arbitration ruling, ExxonMobil said: “We disagree with the ICC panel’s interpretation but respect the arbitration and dispute resolution process. As we’ve said before, ExxonMobil and CNOOC are aligned that we had a duty to ensure contract terms are always adhered to and not set a bad precedent for ourselves and industry.

“Given the significant value we’ve created in the development of the Guyana resource, we believed we had a clear duty to our investors to consider our preemption rights to protect the value we created through our innovation and hard work at a time when no one knew just how successful this venture would become.”

The U.S. giant, which plans to deploy six FPSOs with a gross production capacity of over 1.2 million barrels of oil per day on the Stabroek block by the end of 2027, has hinted at the potential for up to ten FPSOs to develop the estimated gross discovered recoverable resources of over 11 billion barrels of oil equivalent.

After ExxonMobil set out to get the required approvals for Hammerhead as its seventh deepwater oil project in Guyana to add between 120,000 and 180,000 barrels per day (bpd) by 2029, raising the country’s overall production capacity bar to nearly 1.5 million bpd, MODEC was put in charge of delivering an FPSO for the project.

“We welcome Chevron to the venture and look forward to continued industry-leading performance and value creation in Guyana for all parties involved,” added ExxonMobil.