Mining multinational BHP starts talks to exit oil and gas industry
The mining multinational BHP has begun talks to exit the oil
and gas industry by merging its hydrocarbon business with Australia’s top
independent gas producer, Woodside Petroleum.
BHP said a merger with Woodside was one of the options being
evaluated as part of a strategic review of its oil and gas business, and its place
in the company’s long-term portfolio.
BHP added that a merger of Woodside and its oil and gas
business, which is valued at between $13bn and $15bn, could include
distributing shares in Woodside to BHP shareholders, but that “no agreement has
been reached on any such transaction”.
The talks have emerged after recent speculation that BHP
planned to shake off its oil and gas assets, ranging from oil and gas fields in
Australia, Algeria and the Gulf of Mexico, to focus on producing metals that
can help the green energy transition.
The $181bn Anglo-Australian miner, which owns one of the
world’s largest copper mines, earns the majority of its profits from producing
iron ore and copper and plans to accelerate its shift towards these raw
materials used in electricity infrastructure.
Saul Kavonic, an analyst at Credit Suisse Group, said BHP’s
petroleum division “simply no longer fits within BHP’s portfolio or
future-facing strategy”.
“BHP should know it’s better to exit petroleum sooner rather
than later,” he added.
BHP has halved its oil and gas production in recent years
following the sale of its US shale business to BP in 2018. The company’s oil
and gas production fell from 235m barrels in 2013 to about 103m in the 12
months to June.
Shareholders have criticised BHP’s ongoing investments in
oil and gas, which are linked directly to the sharp rise in atmospheric carbon
dioxide emissions responsible for the climate crisis.
At the company’s annual shareholder meeting last October,
its chair, Ken MacKenzie, said that although BHP accepted “the science around
climate change” and supported the Paris climate accord “the reality is that all
current plausible scenarios show that fossil fuels will be part of the energy
mix for decades”.
The BHP chief executive, Mike Henry, said the company saw
oil and gas as “something to invest in for the short to medium term”.
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