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) 