The U.S. Federal Trade Commission barred Hess Corp. CEO John Hess from sitting on the Chevron board of directors. (Source: Shutterstock.com)
The U.S. Federal Trade Commission (FTC) approved Chevron’s blockbuster acquisition of rival Hess Corp. in a move that will bar CEO John Hess from serving on the Chevron board.
In a complaint, the FTC alleges that John Hess “communicated publicly and privately with the past and current Secretaries General of [OPEC] and an official from Saudi Arabia” to influence global oil markets.
“In these communications, Mr. Hess stressed the importance of oil market stability and inventory management and encouraged these officials to take actions on these issues and speak about them at different events, the complaint alleges,” the FTC said in a Sept. 30 announcement. “Mr. Hess further encouraged his OPEC competitors to stabilize production and draw down inventories, the complaint alleges.”
FTC Bureau of Competition Director Henry Liu said Hess’ communications about global oil output and crude oil market competition “disqualify him” from serving on the Chevron board.
Serving as a Chevron board member, the FTC alleges, would give Hess a larger platform “to amplify his supportive messaging to OPEC and others about OPEC’s market stability goals, increasing the likely hood that Chevron could align its production with OPEC’s output decisions to maintain higher oil prices.”
The commission voted 3-2 to accept the consent agreement.
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The Hess board of directors said the complaints raised by the FTC are without merit and are well within John Hess’ role as CEO of the company.
“Oil and gas are going to be needed for decades to come and the key challenge is long term investment,” Hess said in a Sept. 30 statement. “For more than 10 years, I have advocated for a significant increase in global investment, both in oil and gas and renewable energy, to have the necessary supply to keep energy affordable and secure for American consumers in the future.”
Instead of serving on the Chevron board, Hess will serve as an adviser to Chevron on government relations and social investments in Guyana, Chevron said in its own statement.
“I have the utmost respect for John, the company he has built and the contributions he has made to our industry,” said Chevron Chairman and CEO Mike Wirth. “It is unfortunate that our board of directors will not get the benefit of his decades of global experience, but we look forward to drawing upon his knowledge, relationships and experience in Guyana through his service as an adviser to Chevron.”
The $55 billion tie-up between Chevron and Hess remains subject to other closing conditions, including a pivotal arbitration proceeding regarding Hess’ ownership interest in the Stabroek Block offshore Guyana.
Hess’ subsidiary, Hess Guyana Exploration Ltd., is currently in arbitration with respect to the right of first refusal in an agreement with Exxon Mobil Corp. and China National Offshore Oil Corp. (CNOOC) regarding the Stabroek Block. A hearing won’t occur until at least mid-2025.
Chevron said it remains confident that the arbitration process will affirm its own position in the Guyana consortium.
The FTC’s latest intervention echoes a similar complaint leveled at Pioneer Natural Resources CEO Scott Sheffield, who was barred from sitting on the Exxon Mobil board of directors. Exxon closed its own $60 billion acquisition of Pioneer in May, massively boosting its Permian Basin position.
Sheffield also pushed back on the FTC’s antitrust concerns, saying the decision was “arbitrary, capricious, an abuse of discretion, beyond the FTC’s lawful authority and not in the public interest.”
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