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Chevron to Buy Rival Hess for $53b in Second Big Oil Mega-Deal in Weeks as IEA Says Demand Will Peak By 2030

CRISIS - Atmospheric CO2 Levels by Martina Igini Americas Oct 25th 20233 mins
Chevron to Buy Rival Hess for $53b in Second Big Oil Mega-Deal in Weeks as IEA Says Demand Will Peak By 2030

Chevron’s announcement came just two weeks after oil giant Exxon said it would acquire Pioneer Resources for $60 billion.

American oil giant Chevron is buying independent oil and natural gas company Hess Corporation for US$53 billion, the second Big Oil consolidation deal in weeks.

The acquisition adds a major oil field off the coast of Guyana, a South American country highly contented among oil giants Exxon Mobil, Chinese CNOOC, and Hess since its discovery in 2015, as it is poised to become the world’s fourth-largest offshore oil producer. In a statement published Monday, Chevron, one of the largest companies in the world and the second-largest US-based oil company by revenue, said that Hess’s assets in US shale and Guyana will “grow production and free cash flow faster.” 

“This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets,” said Chevron Chairman and CEO Mike Wirth. 

“I believe our strategic combination creates a company that is stronger in every respect, with the leadership, asset portfolio and financial resources to lead us through the energy transition and deliver significant shareholder value for years to come,” said CEO John Hess, who praised Hess’ and Chevron’s world-class portfolios.

The deal follows another huge Big Oil investment announcement, even as the rest of the world is moving off fossil fuels. Exxon Mobil, the largest non-government-owned company in the energy industry, said two weeks ago it would acquire Pioneer Resources for $60 billion.

Record Profits

Oil companies have scored record profits after Russia’s invasion of Ukraine created a favourable market for Big Oil as it pinched oil supplies and sent prices higher, sparking backlash among environmental groups who accuse oil companies of profiting from the situation rather than trying to ease the pain for consumers and invest in the energy transition.

Exxon, which produces about 3% of the world’s oil and about 2% of the world’s energy, reaped a record US$55.7 billion in profit last year, bringing home about $6.3 million per hour. The total was more than double 2021’s figure and far exceeded the prior record of $45.2 billion set in 2008, making it the most profitable year ever for any American and European fossil fuel company.

Exxon, Chevron, and other oil giants BP, Shell, and TotalEnergies recorded a combined $190 billion in profits for 2022. Together, the companies are responsible for more than 10% of global carbon emissions since 1965. 

A 2021 research examining their clean energy transition activity found that, despite a marked increase in climate action and pledges on decarbonisation as well as the use of keywords such as “climate”, “low-carbon’”, and “transition” between 2009 and 2020, there is no real evidence of a transition towards clean energy business models. On the contrary, evidence points that companies are increasing rather than decreasing oil exploration. BP and Shell have promised to reduce investments in fossil fuel extraction projects, but both increased their acreage for new exploration in recent years. 

Time’s Up

The news comes as a new report published Tuesday by the International Energy Agency (IEA) suggests that the world may see demand for oil and other fossil fuels peak in this decade, as the world shifts to electric vehicles and renewable energy sources, which are expected to supply 50% of global electricity by 2030, up from 30% today.

“I have a gentle suggestion to oil executives, they only talk among themselves,”  Fatih Birol, executive director of the IEA, told the New York Times. “They should talk to car manufacturers, to the heat pump industry, to the renewable industry, to investors – and see what they all think the future of energy looks like.”

You might also like: Current World Electricity Grids Too Weak to Sustain Energy Transition, IEA Warns

About the Author

Martina Igini

Martina is the Managing Editor at Earth.Org. She holds two BA degrees, in Translation/Interpreting Studies and Journalism, and a MA in International Development from the University of Vienna. After working at the United Nations Global Communication Department in Vienna, she joined a newspaper in Italy as a reporter before moving to Hong Kong in 2020. Her interests include sustainability and the role of public policy in environmental protection with a focus on developing countries.

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