CHEVRON expects a resolution to a dispute with ExxonMobil over a Guyana oil contract in the coming months that would allow for the completion of the US$53 billion acquisition of Hess this year.

ExxonMobil began arbitration proceedings in March, arguing it has a right of first refusal over Hess’ 30 per cent stake in the Stabroek Block operated and 45 per cent owned by ExxonMobil. Hess has asked for a hearing in the third quarter and a decision in the fourth quarter.

“That’s the timing we are working towards in a process that’s still unfolding,” Chevron chief executive officer Mike Wirth said on Monday (Apr 29). Five to six months is “a sufficient time frame within which to clarify the specific contract provisions here”.

ExxonMobil and Chevron have both appointed one arbitrator to what will be a three-person panel that will decide the case. Chevron argues Exxon’s right of first refusal does not apply because its deal is a corporate merger with Hess, rather than an asset sale.

“We are confident we have the right interpretation of this contract,” Wirth said.

The dispute already has delayed Chevron’s acquisition of Hess, threatening to leave the oil giant in strategic limbo for months or longer. The transaction still needs approval from the US Federal Trade Commission through a separate process. ExxonMobil’s discovery of an 11 billion-barrel trove of oil in Guyana is a key driver of the stock’s outperformance relative to rivals over the past three years. The Hess deal would help Chevron close that gap.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Wirth indicated there are currently no parallel negotiations ongoing with ExxonMobil. The arbitration proceeding is governed by the International Chamber of Commerce.

“Before the arbitration process was initiated we had been in conversation, and Hess had been in conversation with the other members of this joint-operating agreement in an effort to understand their concerns,” Wirth said. “The arbitration really ended those discussions at the time, and that’s the path that we are on today.” BLOOMBERG