Chevron pursues oil in Guyana through $53 billion takeover of oil exploration company Hess

For the first time, the International Energy Agency (IEA) dared to predict on Tuesday: not only the consumption of coal, but also that of oil and gas, will “peak” by the year 2030. After that, the use of the three fossil fuels will to decrease. The decline will be rapid in the case of coal, but very slowly in the case of oil and gas, according to the annual report World Energy Outlook.

The transition to clean energy is “ongoing globally” and is “unstoppable,” IEA Director Fatih Birol said upon publication of the report. At the same time, the demand for fossil energy remains “far too high” to limit climate warming to 1.5 degrees, as internationally agreed in Paris (2015), the agency warns.

Cluster of oil fields in Guyana and Suriname

It is precisely this continued high demand that the Americans are counting on oil majors, the giants in the oil sector. They want to expand and they are on an acquisition path. Earlier this month, Exxon Mobil announced it would acquire one of the largest players in the shale sector, Pioneer Natural Resources, for 60 billion dollars (57 billion euros). This week, news followed from ExxonMobil’s rival Chevron: Chevron is buying oil exploration company Hess for $53 billion.

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Chevron thus buys access to what is seen in the oil sector as a major source of income in the coming years: the so-called Stabroek block off the coast of Guyana, a cluster of several oil fields. Chevron already has exploration rights off the coast of neighboring Suriname. ‘Stabroek’ is named after the old Dutch name of the city of Georgetown, capital of present-day Guyana.

The country with around 800,000 inhabitants, which in the past had several European colonizers, has become a hub for the international oil industry in recent years. The Stabroek block was discovered by Exxon in 2015 and is estimated to yield 11 billion oil barrels. Already, around 400,000 barrels of oil come out of the ground every day. Natural gas is also extracted. Hess has a 30 percent stake in Stabroek, which is 45 percent owned by Exxon. The remaining 25 percent of the rights are owned by the Chinese company CNOOC International. Another reason why Chevron targeted Hess is because of Hess’s profitable shale oil fields in the US state of North Dakota.

The giants in the oil sector want to expand and they are on the acquisition trail

The trend in the US oil and gas industry has been ‘consolidation’ for several years. The big ones swallow up the small and medium-sized companies. Pioneer, Exxon’s prey this year, bought two small companies of its own in 2021, Parsley Energy and DoublePoint Energy. Chevron acquired Texas-based Noble Energy in 2020. The takeover trend gained momentum with the enormous gains made in the energy sector since Russia’s invasion of Ukraine in 2022, which drove up oil and gas prices. Currently, another geopolitical shock, the violence in Israel and Gaza, is putting further upward pressure on oil prices, which were close to $90 a barrel on Tuesday.

The acquisitions of Chevron and Exxon are strongly driven by shareholder calls for higher dividends. It is not without reason that it is at the top the press release from Chevron about the acquisition that “higher shareholder payouts” are in the offing.

Shareholders view the deal with some skepticism: Chevron shares were put down 3.7 percent in New York on Monday and were also down on Tuesday.

And the climate? In the press release, Chevron and Hess say that the CO₂intensity of oil extraction off the coast of Guyana is relatively low, otherwise the theme is avoided. In a recent interview with the Financial Times Chevron CEO Mike Wirth was asked about the climate transition. He said the world will simply continue to use oil and gas – and that Chevron wants to continue making money from it.

Regarding the IEA’s scenarios, he said: “I think they are really wrong (…) You can make scenarios, but we live in the real world and have to invest capital to meet real world demand. world”. Demand for fossil fuels will continue to grow, he said, “until 2030 and beyond.”