The Federal Trade Commission (FTC) has given its approval for Chevron's $53 billion acquisition of Hess Corporation but has barred Hess CEO John Hess from joining Chevron's board. The approval, announced on Monday, follows concerns raised by the FTC over Hess’s past communications with officials from the Organization of the Petroleum Exporting Countries (OPEC).

According to the FTC, Hess had engaged in both public and private communications with OPEC representatives, encouraging them to manage global oil output and inventories in ways that support higher prices. The FTC's complaint highlighted that his participation on Chevron's board could increase the likelihood that Chevron would align its production strategies with OPEC's output decisions, potentially leading to elevated energy prices.

Chevron and Hess Corp. agreed not to appoint John Hess to Chevron's board as a condition to move forward with the merger. Despite the FTC's concerns, Hess Corp. described these concerns as "without merit." The company stated that John Hess’s communications with OPEC mirrored his discussions with the U.S. government and other global energy stakeholders about the need for a stable energy transition.

Though John Hess will not join Chevron's board, he will serve as an advisor to Chevron on government relations and social investments in Guyana. Chevron's CEO, Mike Wirth, welcomed the FTC’s decision as a critical step towards completing the merger, even though he expressed regret over Hess's exclusion from the board.

The FTC’s decision still leaves the companies facing a challenge from Exxon Mobil and CNOOC Ltd, who claim a right of first refusal over Hess's oil assets in Guyana. This dispute will go to an arbitration panel with a decision expected by mid-2025. Should the arbitration panel rule in Exxon’s favor, the merger would not proceed.

This regulatory approval follows a similarly structured order in Exxon Mobil's acquisition of Pioneer Natural Resources, where Scott Sheffield, former CEO of Pioneer, was banned from joining Exxon's board due to allegations of colluding with OPEC.

The FTC commissioners were split on the decision, voting 3 to 2 in favor of barring Hess. Commissioner Andrew Ferguson, one of the dissenting votes, criticized the majority's position, arguing it lacked substantial antitrust basis and was politically motivated. However, FTC Chair Lina Khan defended the decision, stating that the involvement of U.S. oil executives with OPEC representatives threatens market competition and results in higher prices for consumers.

Both Chevron and Hess Corp. expressed confidence that they will prevail in their legal dispute with Exxon and CNOOC. In financial markets, Hess shares saw a 1.6% increase, closing at $135.80, while Chevron shares rose by 1.2% to $147.27.

The Chevron-Hess merger is seen as a significant move amidst the ongoing consolidation trend in the U.S. oil and gas industry, with several multi-billion-dollar deals disclosed recently.