The long-standing dispute between ExxonMobil and Chevron over the prized Stabroek oil block off the coast of Guyana is set to reach a critical juncture, with arbitration proceedings scheduled to begin on May 26.

The arbitration, to be heard by a three-judge panel at the International Chamber of Commerce, will determine whether Exxon and its partner CNOOC have the right to block Chevron’s proposed $53 billion acquisition of Hess Corporation, which holds a 30 per cent stake in the Stabroek block. Exxon operates the block with a 45 per cent interest, while CNOOC owns 25 per cent.

The Stabroek block is widely regarded as the most significant oil discovery of the past decade, boasting more than 11 billion barrels of oil equivalent in recoverable resources.

Production from the field has consistently exceeded expectations, making it a cornerstone of Chevron’s planned acquisition of Hess, first announced nearly 18 months ago.

For Chevron, securing Hess’s stake in Stabroek would provide a much-needed boost to its oil and gas reserves, which fell to their lowest level in over a decade at the end of 2024.

The deal is seen as transformative, potentially reshaping Chevron’s global production profile.

The core of the dispute lies in the joint operating agreement governing the Stabroek block.

Exxon and CNOOC argue that this agreement gives them a right of first refusal on any sale of Hess’s stake, effectively allowing them to match Chevron’s offer and prevent the transfer.

Chevron and Hess, meanwhile, maintain that the right of first refusal does not apply to mergers or corporate acquisitions, only to direct asset sales.

Exxon and CNOOC filed their arbitration claims in March last year, about four months after Chevron’s acquisition plans were made public.

While the date and venue of the hearing had not been previously disclosed, the upcoming arbitration is expected to be closely watched by the energy industry.

A spokesperson for Hess has indicated that a decision is anticipated by the third quarter of this year.

Neither Exxon nor Chevron has commented on the scheduled hearing.

However, Chevron’s recent purchase of a 4.99 per cent stake in Hess’s common shares on the open market in March signals the company’s confidence in the deal’s eventual completion.

The outcome of the arbitration could have far-reaching consequences for the global oil sector, potentially influencing future mergers and acquisitions involving joint venture assets.