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The United States Federal Trade Commission (FTC) has finalized an agreement that bars Hess Corp.’s chief executive from holding a board position at Chevron Corp., to settle antitrust concerns surrounding the companies’ merger.
The competition regulator first announced the ban September 30, 2024, as a condition to clear Chevron’s $60 billion purchase of smaller rival Hess. The companies also announced at the time the FTC had concluded its extended review of the transaction under the Hart-Scott-Rodino Antitrust Improvements Act.
The FTC has now published the final consent order resolving antitrust concerns it has raised over the combination. It voted 3-2 to approve the agreement. The publication opens a 30-day public comment period.
The decision states that John Hess should not hold a board, advisory or representative position at Chevron.
The FTC alleges the Hess chief executive had talks with officials of the Organization of the Petroleum Exporting Countries (OPEC) about controlling oil production and that such a position at Chevron would give him a stronger platform to rally the industry on keeping barrels more expensive.
“Mr. Hess communicated publicly and privately with the past and current Secretaries General of the Organization of Petroleum Exporting Countries and an official from Saudi Arabia”, the FTC said last September. “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”.
“Mr. Hess further encouraged his OPEC competitors to stabilize production and draw down inventories… As Mr. Hess has noted publicly, there is a direct correlation between inventory levels and oil prices”, the FTC added. “Reductions in crude oil exploration and production generally lead to higher oil prices and higher prices for products derived from oil, including transportation fuels such as gasoline, diesel, and jet fuel, and heating oil”.
Hess responded at the time by saying John Hess’ communications with industry officials did not mean to harm competition. “Mr. Hess’ public and private communications with OPEC officials were consistent with his communications with U.S. government officials, the International Energy Agency and global business leaders on what will be needed to ensure an affordable and orderly energy transition”, the company said in a statement.
John Hess said in the 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”.
In a separate statement then, Chevron chief executive Mike Wirth said, “It is unfortunate that our Board of Directors will not get the benefit of his [John Hess] decades of global experience, but we look forward to drawing upon his knowledge, relationships and experience in Guyana through his service as an advisor to Chevron”.
The companies’ agreement with the FTC allows John Hess to serve as a Chevron advisor or representative in engagements involving government officials in Guyana, where Hess holds a stake in the Stabroek block.
While the FTC concluded its statutory review of the merger, Chevron and Hess have yet to complete the transaction, pending international arbitration involving Hess’ partners in Stabroek — Exxon Mobil Corp. and China National Offshore Oil Corp.
The FTC had set a similar condition for ExxonMobil’s $64.5 billion acquisition of Pioneer Natural Resources Co. On May 2, 2024, it said it has prevented ex-Pioneer chief executive Scott Sheffield from holding a board or advisory position in ExxonMobil.
Pioneer said at the time the FTC accusation “reflects a fundamental misunderstanding of the U.S. and global oil markets and misreads the nature and intent of Mr. Sheffield’s actions”.
“On the contrary, Mr. Sheffield focused on legitimate topics such as investor feedback on independent oil and gas company growth and capital reinvestment frameworks; unfair foreign practices that threatened to undermine U.S. energy security; and, through dialogue with government officials, the need to sustain a resilient, competitive and economically vibrant oil and gas industry in the United States”, Pioneer said.
Along with the final agreement with Chevron and Hess, the FTC concurrently finalized the decision that settles its antitrust concerns over the ExxonMobil-Pioneer merger. ExxonMobil had already announced the completion of the merger May 3, 2024.
“Additionally, the final consent order requires that for a period of five years, Exxon shall not nominate, designate, or appoint any Pioneer employee or director, other than certain named individuals, to the Exxon board”, the FTC said in a statement.
“In addition, under the final order, Exxon, for a period of 10 years, will agree to certain Clayton Act Section 8 attestation and reporting obligations”.
The FTC voted 3-2 on the agreement with ExxonMobil.
To contact the author, email jov.onsat@rigzone.com
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