WRINKLES IN THE PETROVERSE

The landscape of Guyana’s nascent petroleum industry was significantly altered in October 2023 when Chevron Corporation announced its intended purchase of Hess Corporation.

- TULSI DYAL SINGH

A Major Shakeup in the Ownership

Earlier in the month, it was altered too, though less directly, when ExxonMobil announced its acquisition of Pioneer Natural Resources. ExxonMobil and Hess together own 75 percent of the triumvirate which owns the mineral rights to Guyana’s Stabroek Block. The Chinese company CNOOC owns the other 25 percent. ExxonMobil owns 45 percent and is the operator of the Stabroek Block.

These ownership changes point to changes in the priorities that buyers and sellers constantly monitor and respond to in the ongoing business of enhancing

shareholder value and returns, in a fast moving and often unpredictable Petroverse. While Guyana is the sovereign owner of the Stabroek Block, the real decision makers are the major international oil corporations that have acquired the mineral rights, have the financial resources and the technical and technological expertise to bring the oil and gas to the surface, ready for monetization. Guyana is mostly a bystander while it receives its two percent royalty and guaranteed 12.5 percent profit share until the corporate investors have recovered their capital outlays.

John Hess, the chief executive officer of Hess Corporation was the most vocal cheerleader of Guyana’s oil, as he promoted the promises of Guyana’s bountiful oil reserves; the advantaged exploitation agreement they had obtained; the

pliability of their counterparts in Guyana; the ease of securing environmental passes; contracting with deep water drillers at the bottom of a low-cost cycle; crunchy, porous rocks laden with high quality Brent oil; and one of the lowest breakeven costs in the oil industry. Hess’ stock price reached its highest point ever as the corporation’s profit soared. So, why did he sell, at this time, to Chevron?

Significance of the Sale