Hess CEO offers upbeat oil demand forecast, says Guyana’s potential barely scratched

By Sheila Dang

HOUSTON – Hess CEO John Hess on Tuesday said he sees the oil market as closer to being balanced than oversupplied this year, despite worries about demand from China and greater production from U.S. and non-OPEC producers.

He offered an optimistic view of the shale oil market and the oil producer’s own prospects in Guyana in remarks to investors at the Goldman Sachs Energy, CleanTech and Utilities Conference in Miami. Hess cautioned the market could be volatile this year, citing political risks with Iran and Venezuela.

“Demand is a little more robust than people thought,” said Hess, adding that analysts were looking at projected inventory builds of a million barrels per day, which has been cut by half.

Hess also said the company’s future in Guyana has a long way to go with production on the discoveries to date still early. He said the Guyana joint venture with Exxon Mobil and CNOOC plans to add two more vessels in 2026 and 2027, bringing the total to six vessels. Even then, those six will only tap five of the 11 billion barrels of oil equivalent that have been discovered so far, Hess said.

Investors can expect to see more efficiency in shale oil drilling, which will offset the fact that shale, other than the Permian Basin oilfield, is now a mature 20-year-old industry, Hess said.

Hess is producing 200,000 barrels per day in shale, which will “run for the next 10 years at that kind of rate,” he said.

Chevron’s $53 billion deal to acquire Hess has been stalled by a contract arbitration challenge by Exxon Mobil and CNOOC, Hess’s partners in a Guyana oil joint venture, who claim a right of first refusal to any sale of Hess’s Guyana assets.

Hess said on Tuesday that he expects a decision in the arbitration case by late August or September.

“We’re very confident that the merger is going to go through and we’re getting prepared for that,” Hess said.

(Reporting by Sheila Dang in Houston; Editing by Alistair Bell)