In a landmark decision, the Federal Trade Commission (FTC) has imposed a significant condition on the proposed $53 billion merger between Hess Corp. and Chevron. As part of the deal, Hess Corp.’s CEO, John Hess, will be barred from serving on Chevron’s board of directors. The FTC alleges that Hess engaged in improper communications with OPEC representatives, potentially influencing global oil output and prices.
The commission claims that Hess’ involvement on Chevron’s board would increase the likelihood of the company aligning its production with OPEC’s output decisions, ultimately leading to higher prices for consumers. Hess Corp. has disputed these allegations, stating that the CEO’s communications with OPEC were consistent with his previous statements to the U.S. government.
Despite this, the companies have agreed to exclude Hess from Chevron’s board to facilitate the merger’s completion. Instead, Hess will serve as an advisor to Chevron on government relations and social investments in Guyana.
The FTC’s decision has paved the way for the deal to move forward, but it still faces a significant hurdle. Exxon Mobil has filed claims with an arbitration panel, arguing that it has a right of first refusal over Hess’ lucrative oil assets in Guyana. If the panel rules in Exxon’s favor, the Chevron-Hess deal will be blocked.
The FTC’s ruling has sparked controversy, with Commissioner Andrew Ferguson dissenting and accusing the commission of bowing to political pressure from Democratic politicians. Ferguson dismissed the idea that Hess’ comments could significantly impact global oil markets.
This decision marks the second time the FTC has intervened in a major oil industry merger, having previously banned former Pioneer CEO Scott Sheffield from Exxon’s board over similar allegations of colluding with OPEC to raise oil prices.
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