Guyanese Try To Avoid Oil Wealth Curse of Osage Indians As Depicted In “Killers Of The Flower Moon”

Venezuela Deploys Military To Oil-Rich Guyana’s Border. Guyanese Try To Avoid Oil Wealth Curse of Osage Indians As Depicted In “Killers Of The Flower Moon”

The tiny Caribbean nation has the fastest-growing economy in the world!!

On Wednesday, Venezuela’s minister of defense, Vladímir Padrino, accused Exxon of relying on the American military for its security and using Guyana for its own benefit.

The Maduro government is ratcheting up his leverage over Guyana to get access to its newfound energy wealth.

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Venezuela is backing up its threats to annex part of Guyana and secure access to some of the world’s largest oil finds in more than a decade by moving light tanks, missile-equipped patrol boats and armored carriers to the two countries’ border in what is quickly turning into a new security challenge for the Biden administration.

The deployment, visible in satellite images made public Friday and in videos recently posted by Venezuela’s military on social media, is a significant escalation in Caracas’s attempts to obtain some leverage over its neighbor’s newfound energy reserves.

It comes despite a written agreement reached in December between Venezuelan President Nicolás Maduro and Guyanese President Irfaan Ali that denounced the use of force and called for a commission to address territorial disputes.

Since late last year, the Venezuelan government, which has an army of up to 150,000 active soldiers and modern armaments provided by its ally Russia, has ratcheted up claims to the Essequibo, a mostly jungle-covered region that makes up two-thirds of Guyana.

The deployment and increasingly bellicose language from Caracas has come as Guyana emerges as one of the world’s hottest energy frontiers following offshore oil discoveries by an Exxon Mobil-led consortium.

The former British colony, population 800,000, has a defense force of only 3,000 service members, pushing the government to work more closely with the U.S. to enhance its defensive capabilities.

“We are not surprised by the bad faith of Venezuela,” Guyana’s Foreign Ministry said in a statement to The Wall Street Journal in response to questions about the military deployment. “We are disappointed, not surprised.”

Venezuela’s Information Ministry didn’t respond to calls and emails seeking comment. The country has said it is boosting its defenses in response to the U.S. military’s exercises in Guyana in December and the U.K.’s deployment of a small antinarcotics vessel, the HMS Trent, in Guyanese waters.

“They will receive a proportional, forceful response in the maritime area that rightfully belongs to Venezuela,” he wrote on X. “The Essequibo is ours!”

Maduro’s deployments, along with a referendum he held in December in which he asserted that millions of Venezuelans approved of plans to seize the Essequibo, has alarmed policymakers in the Biden administration, which is already stretched in fashioning a response to Venezuela’s alliances with Russia, Iran and China.

In recent months, U.S. officials from the Defense Department and White House have visited Guyana’s capital, Georgetown, for talks on increasing cooperation. President Ali said his government would soon purchase American helicopters, drones and other defense equipment.

“Supporting Guyana to strengthen its defensive capability as it continues to bring enormous oil windfall on the market is something we have a direct interest in,” Juan Gonzalez, a senior Biden adviser, told reporters in Colombia on Monday, a day after meeting Guyana’s president in Georgetown. “We certainly don’t want to escalate tensions, but we have our own strategic relationship with Guyana.”

The Washington-based Center for Strategic and International Studies, using satellite images provided by Maxar Technologies and shared exclusively with the Journal, found that in late 2023 and January Venezuela moved armored vehicles and what appear to be light tanks to Anacoco Island on the Cuyuni River just yards from Guyana.

Construction work is also taking place, signaling the expansion of a base there.

In Venezuela’s Atlantic port of Güiria, the country deployed between Jan. 18 and Jan. 22 at least three Iranian-made Peykaap III antiship guided-missile patrol boats, as is visible in the satellite images used by CSIS, the Washington think tank.

The regime’s military set up two Russian-built Buk M2E antiaircraft systems in Güiria on Jan. 31, almost 400 miles east of their usual position near Venezuela’s capital, Caracas.

And a small coast-guard post in Punta Barima, 50 miles from Guyana-controlled Essequibo, is being revamped into a naval and air base.

Those deployments are within easy reach of the Stabroek oil block run by Exxon and its partners, Chevron and China’s Cnooc, off the coast of Guyana, where production has soared to 645,000 barrels of crude a day, not far off what Venezuela produces.

The heightened tensions on the northern shoulder of South America prompted shipping-industry risk assessors at Lloyd’s Market Association in London to put Guyana on its global list of areas affected by war, piracy and terrorism.

The designation raises insurance costs for operators and puts Guyanese waters on the same risk level as the Red Sea, where Iran-backed Houthi rebels have attacked ships, as well as the Black Sea routes imperiled by Russia’s invasion of Ukraine.

Exxon says it is undaunted. “We are not going anywhere—our focus remains on developing the resources efficiently and responsibly, per our agreement with the Guyanese government,” spokeswoman Michelle Gray said in a statement.

The images show that the movement of materiel and troops was occurring at the same time as the foreign ministers of Venezuela and Guyana were meeting in Brazil late last month under the auspices of President Luiz Inácio Lula da Silva to create a commission to oversee disagreements.

“The Venezuelans are moving a bunch of stuff around and kind of making military noise, showing it all off on social media while they’re also trying to tell the Guyanese, ‘Well, let’s negotiate on friendly terms,’ ” said Christopher Hernandez-Roy, deputy director of the Americas Program at CSIS.

“This is not being a good neighbor. They’re doing tank drills 140 yards from the Essequibo—yards.”

Videos posted on social media by Venezuela’s military highlight a concerted effort to upgrade a number of river patrol posts along the Essequibo and build a multifloored command center for troops specializing in jungle operations, said Andrei Serbin Pont, president of the Buenos Aires-based research group Cries, which closely tracks Venezuelan military maneuvers.

He sees a striking political parallel with Argentina’s failed 1982 invasion of the Falkland Islands from the U.K., in which a desperate military junta sought to distract the public from domestic economic troubles.

In Maduro’s nearly 11 years in power, Venezuela’s economy has contracted roughly 70% and 7.7 million people, a quarter of the population, have fled.

“If we put this in the Venezuelan context, the regime is setting the conditions to externalize their crisis through a historical land claim,” Serbin Pont said.

Former high-ranking Venezuelan military officers and analysts of the country’s army don’t think the regime plans to invade. Rather, they believe the regime, seeing how tiny Guyana has gone from a poor backwater to an important oil producer, wants to negotiate some kind of deal that could benefit Venezuela.

“What they’re trying to do is extort,” said Isidro Perez, a former Venezuelan army colonel who studies the regime’s use of the military against adversaries.

Maduro and other Venezuelan officials have frequently said they want Guyana to ditch the border-resolution case it filed at the United Nations’ International Court of Justice to put an end to Venezuela’s century-old claims and instead engage in direct negotiations. And they say they want Venezuela to benefit from energy and mining projects in the Essequibo.

“Guyana and Exxon Mobil will have to sit and negotiate with us,” Maduro wrote in December on X.

Venezuela’s buildup near Guyana has come after the U.S. relaxed some U.S. economic sanctions to nudge Maduro to hold fair elections and receive Venezuelan migrants deported from the U.S.

Instead, rights groups say, Maduro has jailed dissidents and banned rivals from running against him in presidential elections that are supposed to take place later this year.

Venezuela’s threats have raised concerns among other neighbors, including Maduro’s close ally Brazil, which in recent days deployed dozens of armored vehicles and troops to beef up security at its borders with Venezuela and Guyana.

Venezuela in 2014 was accused of using naval vessels to threaten the Dutch Caribbean island of Aruba to facilitate the release of a top regime official who had been detained on a U.S. drug warrant.

In the past, Caracas has also sent gunboats to shoo away oil survey ships hired by Guyana in disputed waters.

Maduro has directed much of his ire toward Exxon, which abandoned its operations in Venezuela years ago in a falling out with the socialist government and has since shepherded Guyana’s transition into an energy powerhouse.

“The only winners are the people of Venezuela,” Maduro said in December after the referendum on annexing the Essequibo.

His government unveiled a new map at the time with an expanded border encompassing the Florida-size territory. “The only losers are the government of Guyana, Exxon Mobil and the U.S. empire,” he said.

Updated: 2-15-2024

Guyana Is Trying To Keep Its Oil Blessing From Becoming A Curse

The tiny Caribbean nation has the fastest-growing economy in the world, but the boom is stoking challenges from inflation and a growing wealth gap to the looming threat of conflict with Venezuela.

Guyana has undergone a huge transformation in the near decade since a massive oil discovery off its shores. That’s on full display at the Georgetown Marriott hotel.

By sundown, oil executives in branded shirts step out of vans and mingle with tables of development bank officials, already debriefing over yucca balls and iced beers.

A basic room at the chronically sold-out hotel can cost more than $600 on an average night in January. Those prices nearly tripled by the time Guyana’s annual oil conference starts in mid-February, drawing in big energy CEOs and world leaders to the tiny nation of 800,000.

The arrival of the “Marriott crew” is a sign of the change that’s swept the country since Exxon Mobil Corp. struck oil in its waters in 2015. New wells pump out 645,000 barrels everyday, which resulted in $1.6 billion in revenue for Guyana’s government in 2023.

The nation’s economy quadrupled in size over the last five years, going from one of the lowest performing in the region to the fastest growing in the world for two years straight.

The oil deposits are so large relative to Guyana’s population that some projections show it overtaking Kuwait to become the world’s largest per-capita crude producer, accounting for 16% of net growth in oil supply through 2028.

The blind optimism whispered within the hotel’s walls, however, is loudly challenged once you step outside.

“I have not seen it yet, less tasted it,” 55-year-old Corwin Wright said of his nation’s newfound wealth. He sells bucket hats and baseball caps at the nearby Stabroek market, where hundreds of vendors under tarp-covered stalls fight for the attention of passersby in hopes to hawk anything from mangoes and sugar cane juice to freshly caught pacu fish.

On a rare good day, Wright makes $50, which “is enough to pay bills,” he said, “but no more.”

The oil discovery has by and large been a boon for Guyana, a country tucked between Venezuela and Suriname on South America’s north Atlantic coast.

But the former British colony must navigate a path forward that avoids the resource curse that’s plagued petrostates that rely too heavily on unpredictable and finite natural resources while abandoning other areas of the economy.

Newly created jobs in the energy sector are benefitting some of Guyana’s population, but many — like Wright — are suffering under rising living prices and still meager wages. And costs have indeed jumped:

The country’s annual inflation rate was 0.8% in 2016, according to World Bank figures. But the latest estimate, according to the US State Department, pegs the rate at 6.6% in 2023.

It all presents an outsized challenge for President Irfaan Ali, whose pledge to produce sustainable growth and equitable gains for investors and citizens alike will require deep structural changes in transparency and accountability.

Not to mention, threats of interstate conflict have sprouted with Venezuela expanding its military presence on the border.

While Ali has been adamant that oil exploration will continue on schedule regardless, the potential for forced arbitration and any following settlement should Venezuela push forward could add costly years to the nations and producers.

“We’ve had this sea change and a massive windfall, but for an economy to change trajectory is not an easy thing,” said University of Guyana economics professor Thomas Singh.

“We need leadership that acknowledges that this is a difficult society and there are cleavages that can’t be eliminated just by government spending.”

In hopes of escaping the resource curse, the government created a fund to finance the construction of bridges, highways and schools, and provide subsidies for under-privileged groups. However, it’s already raising governance questions, with the government seeking to increase withdrawals.

Current plans for Guyana’s oil wealth distribution are likely to worsen deeply rooted ethnic and political divides, with its Indo-Guyanese population already overrepresented among the top 10% of earners, compared to lower-earning Afro and mixed-Guyanese groups, according to a recent World Development journal report.

“There’s a minefield of things that could go wrong,” Singh said.

Guyana’s Stabroek Block, home to the world’s largest crude discovery of the past decade, is one of the fastest-growing, lowest-cost oil developments outside of Organization of the Petroleum Exporting Countries.

Three newly approved fields are expected to start pumping oil in the next three years. By 2028, Exxon forecasts production will double to 1.2 million barrels a day.

Against this backdrop, unemployment rates have declined and lending to the private sector has multiplied.

The impact is visible and felt upon arrival. Banners for oil and gas training services to supply chain logistics and recruitment hang high over a long line of visitors snaking through the immigration line at Georgetown’s airport.

Others highlight work on a new four-lane highway funded by the Inter-American Development Bank that’s set to replace the bumpy, poorly lit road that currently carries travelers into the city.

Signs in English and Chinese are posted outside the onshore base for a new bridge over the Demerara River.

The project, a joint venture between Guyana and China Railway Construction Corporation, will replace an existing two-lane crossing built in the 1960s, adding two lanes and 24-hour crossing for large boats and the thousands of cars driving in and out of Guyana’s two largest cities.

It’s on track to be completed by the end of the year.

Local companies don’t have the capacity to meet these massive projects’ demands, which is why many have been awarded to foreign companies with some requirements to hire local staff.

Still, the joint ventures give the Guyanese private sector the opportunity to learn and cooperate with large international partners, said Wazim Mowla, associate director for the Caribbean Initiative at the Atlantic Council.

The country is now a key production zone for Exxon and a major reason why its stock has outperformed peers in the post-pandemic era.

On a billboard near its Georgetown headquarters, Exxon says it’s employed nearly 6,000 Guyanese workers, yet the estimated impact through contractors and related industries is far bigger.

Delroy McLean, 28, says the impact of the new jobs has been “life changing.”

He grew up caulking and painting the hulls of boats that would dock on the wharf of Homes Stelling, a small neighborhood of wooden shacks over muddy soil by central Georgetown’s poorest area, known as Tigers Bay.

Now, Exxon contractor Saipem SpA built a yard less than 20 feet from McLean’s childhood home, where he has been able to train and work as a crane operator.

“I’m in a better position to help my family, to help myself,” said McLean, who was able to apply for a home loan through a government program last year and is now living in a rental unit in a better area of town.

“I can save, I can pay my bills, and still have a small something to take my family to the park or the movies.”

Unemployment skyrocketed in Guyana during the Covid pandemic, which led President Ali to successfully campaign on the promise to create 50,000 jobs by 2025.

The jobless rate has trended down since but still holds around 12.4%, with men participating in the labor force at double the rate of women, and with about 40,000 Guyanese people working in the public sector.

A lack of jobs, educational opportunities and livable wages means that about half of the nation’s population lives abroad. Sebastian de Freitas, 33, had left the country to study civil engineering in Brazil when he was offered a lucrative position back in his hometown of Georgetown.

“It’s a bit of planning and also a bit of right place, right time,” said de Freitas, who has spent years training to move up in his role as an ROV pilot from inside an offshore platform.

“The Guyanese are not tailored for the oil and gas industry, but we have transferable skills, we have hard workers. You just have to be willing to work to learn to do it.”

Tiffany Balgobin, 22, assistant instructor and safety diver at 3t EnerMech, echoed the sentiment.

“There are more opportunities and more companies coming in and they need people to hire,” she said. “They need to hire local people rather than have people brought in.”

The government has launched a series of training and apprenticeship opportunities, including a $100 million investment in a first-ever oil and gas training institute expected to open this year.

The center plans to train approximately 4,500 students in welding, vehicle operation and other related trades.

A new hospitality institute is also on the way, seeking to train staff for seven new hotels currently under construction across the country, aiming to meet an expected 2,000-room demand by next year.

The glass and steel structures are new to Georgetown, rising far above its classic pastel-colored colonial architecture done mostly in wood, many of which have been lost to fires through the years.

President Ali’s ambitious plans also include a water-treatment plant, an offshore gas project set to cut energy prices in half and a “smart city” about half an hour from Georgetown that “showcases sustainability” while holding a university, housing and a golf course.

Still, not all feel part of this economic wave sweeping through Guyana. For Jason Sobers, 40, a motorcycle accident that left nearly half his body paralyzed ended his job as a longshoreman and has severely limited his job options.

He sells snacks and drinks from a street kiosk to make ends meet.

“The thing that is hurting me is that I know how rich we’ve gotten and still we have nothing,” said Sobers, who has hung up messages outside his kiosk calling for the fair distribution of his nation’s oil wealth.

“Guyanese people don’t realize they’re missing out. I need to know that we’re benefitting and we’re not.”

The president recognizes that tremendous oil wealth also comes with its set of challenges, including a widening disparity between socioeconomic classes.

“Our national prosperity is where every single family can benefit from the development of our country and can benefit from the resources of our country,” Ali said from his residence in Georgetown.

“How do we invest in the infrastructural transformation, not only the fanciful highways and the big buildings, but in communities that are vulnerable to increase their net value, the net value of their assets, their home and increase the net wealth of families?”

Guyana is seeking to avoid the biggest traps of the resource curse through its natural resource fund. Last year the government withdrew $1 billion from the fund, which is kept in the Federal Reserve Bank of New York.

New efforts to increase withdrawal limits have raised questions about the fund’s governance and its custodians, hired by the Bank of Guyana.

The head of Guyana’s opposition, Aubrey Norton, has repeatedly said that attempts to increase those borrowing limits do not take into account prolonged drops in oil prices, going as far as saying it robs future generations of the certainty that there will be resources saved for them.

“It’s quite possible to get around rules unless we are willing to make these rules work in favor of the country,” said Singh, the University of Guyana professor. “Otherwise, we’d be looking for ways to get around them.”

Guyana has also been widely criticized over its production-sharing agreement with Exxon, which secured the rights to Stabroek under terms so generous that the International Monetary Fund advised the country to rewrite its tax laws and ensure the state gets a higher portion of crude proceeds in future contracts.

Ali has said his administration has been working on a more balanced agreement for future such deals. One option being weighed is handing exploration licenses to a state-owned oil company that would be operated by a strategic partner.

Another option is to open up bidding to private oil companies through an auction.

“We need to recognize that we are dealing with oil companies that are coming in for the oil, that recognize that they can actually develop the resource very, very quickly, but then can do so precisely because the regulatory framework is as weak as it is,” Singh said.

Exxon said in a statement that the agreement made in 2016 was fair, and included “globally competitive terms during a period in which significant technical and price risks remained.”

For de Freitas, his country’s turnaround could offer a chance for his family’s future generations to rebuild their lives in Guyana.

“A lot of the folks that I work with onshore and offshore say they can retire working right here in Guyana,” he said. “If I do indeed continue along this path, I could probably spend another 15 years, 20 years here.”

Updated: 5-27-2024

An Oil-Patch Brawl Over A $53 Billion Megadeal Entwines The Legacies Of Three CEOs

The leaders of Exxon Mobil, Chevron and Hess are duking it out over a generational oil discovery in Guyana.

Days after striking a $53 billion purchase of Hess, Chevron Chief Executive Mike Wirth called his counterpart at Exxon Mobil to discuss their future partnership in a mega-oil project Chevron would inherit through the deal.

Darren Woods told Wirth he looked forward to collaboration in Guyana, where Exxon and Hess own portions of a buried treasure of 11 billion barrels of oil and gas.

Chevron and Exxon have a long-established partnership in projects around the world, one they could expand off the coast of the rainforest-covered South American country, Woods indicated in the October phone call.

Weeks later, Exxon called with a starkly different message for Chevron and Hess: not so fast.

Exxon executives contended they and China’s CNOOC, a third partner in Guyana, have a contractual right to pre-emptively match Chevron’s offer for Hess’s stake in Guyana.

Blindsided, Chevron and Hess disagreed. Both sides dug in, and private talks failed. Amid monthslong discussions, Exxon stunned its rivals again by filing for arbitration and ending talks in March. The proceedings could sink Chevron’s largest-ever deal.

Hinging on the interpretation of several lines in a confidential contract, their dispute has burst like a thunderclap in Houston, the capital of the U.S. oil industry, which hasn’t seen titanic oil companies battle like this since a court fight with Pennzoil forced Texaco into bankruptcy in the 1980s.

The clash between the two largest descendants of John D. Rockefeller’s Standard Oil monopoly has also subsumed some of Wall Street’s most influential advisers, including JPMorgan Chase, Morgan Stanley and Goldman Sachs.

Now, the fortunes of all three companies are intertwined, as are the legacies of Woods, Wirth and John Hess.

If Exxon wins in arbitration, Chevron’s acquisition of Hess would be rendered effectively impossible. For oilman John Hess, it would mean his eponymous company would likely be much harder to sell, and calls into question what’s next for a CEO about to top off his legacy with a momentous transaction.

For Wirth, it would be the second megadeal he has missed out on in the past five years, and increase the pressure on him to secure another big bounty of oil. Woods, on the other hand, would have the option to buy more of the precious Guyana project, if Hess was a willing seller.

Drillers have rushed recently to secure their future oil reserves. Many oil fields are depleting, and further exploration could take decades to pay off.

Wall Street has grown averse to gambling billions on new fields as countries move away from fossil fuels. That has made Guyana’s prolific Stabroek block one of the most coveted in the world, and a crown jewel for Exxon and Hess.

Soon after Chevron’s deal was announced, Exxon’s lawyers, believing the company had a right of first refusal that applied to the transaction, combed through every line of the joint-operating contract for the Guyana project that was written decades ago—a document few have ever seen.

Joint-operating agreements are indispensable in the oil industry, where companies often partner in megaprojects to share risks and investment. The contracts usually contain a right of first refusal for existing partners when one company wants to sell out.

Exxon believes that right is triggered by the corporate takeover. Chevron believes the right applies only to an asset sale.

In months of discussions, Exxon laid out a number of concerns that Chevron believed it could address. Both sides seemed to be working toward a resolution, though it’s unclear what it would have entailed, according to people familiar with the discussions.

The talks ended suddenly in March when Neil Chapman, a senior vice president at Exxon, told the audience at an investor conference his company had filed for arbitration in the International Chamber of Commerce in Paris.

Chevron had learned of the move only a few hours prior, these people said.

If Exxon’s argument prevails, Hess’s Guyana holdings—worth $40 billion or more, by some estimates—would turn into a sort of poison pill. It wouldn’t only blow up the merger with Chevron, per the terms of its agreement with Hess, but would likely scare off any future suitors—except for Exxon itself.

Woods and Chapman maintain their interest is in preserving the sanctity of contracts and their goal is to understand how Chevron valued Guyana—and then to decide which options to explore.

Woods has said he isn’t interested in buying Hess outright, but hasn’t ruled out buying Hess’s chunk of the project or other options.

“We’ve got a very attractive resource that, frankly, we put a lot of effort into developing,” Woods said in an interview. “We have an option to understand what a potential transaction for us would look like and evaluate that for our shareholders.”

The dispute over Guyana is a body blow for John Hess, who runs the last major U.S. oil company controlled by a single family. The tycoon has been frustrated with what he views as a highly unusual situation, and is perplexed about what Exxon wants, according to people familiar with his thinking.

Hess and Wirth personally led the negotiations, after they first discussed the idea of a Chevron-Hess deal over dinner in summer 2021.

The two disagreed on price then, but started talks in earnest last year. The deal was seen as a coup for Chevron, giving it a piece of its rival Exxon’s most important asset.

For years, Exxon and Chevron have been both friend and foe. They are partners on multibillion-dollar projects in places like Kazakhstan and Australia. But the oil giants have also competed fiercely for a shrinking pool of investors willing to park their cash in fossil-fuel companies.

Despite the competition, Woods and Wirth have enjoyed cordial relations—occasionally dining together—since their tenures began in 2017 and 2018, respectively, say people familiar with the matter.

In the eyes of many investors, Exxon has long held the role of big brother to Chevron, with larger oil production and superior profits. But the rivalry shifted in the mid-2010s when Chevron’s shareholder returns in some years began outpacing those of the industry, including Exxon’s.

Wall Street credited Wirth’s cost-conscious approach, which aligned with investors’ push for austerity and a focus on cutting carbon emissions.

Investors favored Wirth’s move to walk away from a bid for shale giant Anadarko Petroleum in 2019 after Occidental Petroleum outbid Chevron with a successful offer of $38 billion. Chevron pocketed a $1 billion breakup fee.

“Chevron, under Mike’s leadership, has navigated some pretty tempestuous waters quite well, and it’s undeniable the company is better today than it was in 2018,” said Dan Pickering, chief investment officer at Pickering Energy Partners.

As Chevron ascended, Exxon suffered setbacks. Woods’ plan to spend heavily to grow production turned off investors. In 2020, Chevron overtook Exxon as the largest U.S. oil company by market value.

In 2021, Exxon lost a proxy challenge to a little-known activist investor who placed three directors on Exxon’s board as it pushed the company to better navigate the energy transition and cut spending.

But in the past few years, Exxon’s fortunes have risen. It collected record profits in 2022 and paid out record shareholder distributions last year.

Woods’ countercyclical investments, unpopular with some investors at the time, paid off when energy prices came roaring back after the pandemic.

He won the full backing of his board for this year’s $60 billion purchase of West Texas fracker Pioneer Natural Resources, a deal well-liked on Wall Street.

Woods has used the momentum to aggressively pursue Exxon’s interests, according to people familiar with the matter. While Exxon, which employs an army of lawyers, is famous for its willingness to fight, the challenge to the Hess deal has turned heads in Houston.

Though the dispute risks some reputational blowback for Exxon, the fate of the deal is more consequential for Wirth than Woods, investors and analysts say.

Wall Street sees the deal for Hess as critical to securing Chevron’s long-term oil reserves and profits. Investors and analysts said if the Hess deal falls through, and Chevron doesn’t acquire another large company or asset, they are concerned the company’s oil-production portfolio could grow thinner in coming years.

At the same time, many of the biggest and most attractive companies have been scooped up in a flurry of deals over the past year.

Chevron executives have tried to reassure investors it has plenty of other prospects, including promising frontier exploration in Namibia, the potential of liquefied natural gas in the Eastern Mediterranean, its megaproject in Kazakhstan and its operations in the Gulf of Mexico and the Permian Basin in West Texas and New Mexico.

But Hess’s Guyana stake represents Chevron’s best option to grow in the eyes of many. The Guyana consortium is expected to produce 1.2 million barrels a day by 2027 and continue pumping large amounts of oil for years, having approved more than $50 billion in project spending thus far.

“If they lose it, then I think it will be a substantial blow to his reputation,” said Paul Cheng, an analyst at Scotiabank.

Chevron and Hess’s advisers spotted the right of first refusal during deal due diligence, but believed it didn’t apply to the transaction and thought it was unlikely Exxon would pursue it, said people familiar with the matter.

Chevron’s financial advisers included Morgan Stanley and Evercore, while Paul, Weiss, Rifkind, Wharton & Garrison served as its legal adviser. Hess’s financial advisers were Goldman Sachs and JPMorgan Chase.

Hess shareholders are due to decide whether to approve the deal or not on Tuesday. Several investors have said they would abstain from voting due to the feud with Exxon.

The sale to Chevron was supposed to be a regal send-off for the 70-year-old John Hess, allowing him to merge the firm he took over from his famously gruff father, Leon Hess, with the second-largest Western oil company.

The merger agreement provides for John Hess to join Chevron’s board, a role that would give him a say in the future of the combined entity.

Legendary Wall Street lawyer Martin Lipton, a founding partner of law firm Wachtell, Lipton, Rosen & Katz, advised Hess on the deal. Shortly after it was announced, he said in an interview that John Hess had concluded Chevron was the best possible buyer for his family company.

“This wasn’t digging up a deal or being forced into a deal,” Lipton said.

John Hess and his family own a roughly 9% stake in Hess worth around $4.3 billion, and the CEO stands to net about $50 million in cash and stock from the change in control alone, according to company filings.

With the transaction in limbo, uncertainty has trickled down to the workforce, with Hess staffers concerned about what lies ahead, according to several employees.

An Exxon win in the arbitration would essentially give that company veto power over who Hess gets sold to—or even if it gets sold at all.

It means that Hess might have to go on operating as an independent company, which raises the question of whether John Hess would remain at the helm—and if not, who would succeed him. Before the deal with Chevron, he hadn’t anointed a successor and was prepared to remain in the CEO seat for years.

Compounding John Hess’s irritation with Exxon is his view that Hess was pivotal in helping turn the fortunes of the Guyana project around.

His company bought Shell’s stake there in 2014 after Exxon and Shell logged dozens of dry wells bereft of oil. Exxon executives have told John Hess his company was essential to the venture’s success, according to people familiar with the matter.

The CEO feels that his geologists played an important role in the exploration efforts that led to a prodigious find. Woods has publicly praised Hess’s work in Guyana.

Hess’s stock price soared in recent years as oil came pouring from the South American discovery. Some large Hess investors are hopeful Hess will end up being acquired by either Chevron or Exxon.

“If John Hess wants to sell, somebody’s gonna buy it,” said John Levin, founder of asset manager Levin Capital Strategies and a long-term Hess shareholder.

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The Weaponization Of Tax Collection ($600 Billion Robbery) Against Black Citizens

Ultimate Resource For Bitcoin’s Inflation Rate VS Gold And The U.S. Dollar

Riddle Me This Batman. How Can Bitcoin Be Money, Property And A Commodity?

TL;DR: The US Is Broke And It’s Brokeness Is Resulting In A Global Fiat-Currency Collapse!!???