State-owned Chinese National Offshore Oil Corp. (CNOOC) has now joined Exxon in filing an arbitration claim to establish their right over Hess’s share of the prolific Stabroek block offshore Guyana. How did CNOOC acquire its 25% share in the block?
- In 1999, Exxon signed a Production Sharing Contract with Guyana.
- Shell was Exxon’s original partner in the block. However, because of poor results from past wells and concerns about territorial disputes with Venezuela and Suriname, Shell relinquished its share.
- Interest in sharing the Stabroek exploration risk was limited, but Hess and Nexen agreed to participate with 30% and 25% shares respectively.
- In what Forbes called “just the beginning of the great American oil and gas grab,” CNOOC sought to acquire Nexen (Canada) in 2012.
- Both the Canadian and US governments expressed reservations about the Nexen takeover in light of national security concerns.
- US government approval was needed because Nexen owned Gulf of Mexico assets.
- Canadian and US approvals were granted and CNOOC acquired Nexen (Canada) in 2013.
- Nexen’s Guyana interest was not mentioned in the press announcement, and appears to have been a rather minor consideration in the acquisition.
So, an apparent afterthought in CNOOC’s takeover of Nexen has (1) proven to be extremely profitable, (2) given the company and the Chinese government leverage in the Exxon-Chevron supermajor dispute, and (3) opened the door for CNOOC to increase their interest in the massive Stabroek field.
Bud's Offshore Energy (BOE) 
Thanks for this post. Did Nexen acquire its 25% Stabroek interest prior to its acquisition by CNOOC? It was my understanding that CNOOC closed its acquisition in 2013 and that CNOOC subsequently acquired its 25% Stabroek interest (through its Nexen subsidiary) in 2014.
Good comment. Upon further review, I believe your understanding is correct. Based on a 2018 article that said Shell relinquished its share a decade ago, I assumed that Nexen acquired its interest prior to the CNOOC acquisition. However, a 2023 “Intercept” article says that Shell did not leave the partnership until 2014. In that case, the CNOOC acquisition of Nexen was before the Stabroek interest was acquired. Thank you for the correction. That is a very significant difference.
Thanks for the quick response. I’m still not certain which answer is correct. There’s been some recent reporting from an M&A news rag that Nexen already held the Stabroek interest at the time it was acquired by CNOOC and that Exxon considered exercising its preemption rights in connection with that deal. Happy to share with you that article if of interest.
Yes, I’d be most interested in that article. I have been unable to find a good chronology for the block.