There have been rumours circulating for some time that BHP is debating whether to ditch its oil and gas assets in an attempt to distance itself from the fossil fuel industry. Like with anything, until confirmed, it was dubbed ‘hearsay’, ‘supposed’, and ‘idle chatter’. But now, the Australian mining titan has confirmed that it is in talks over the potential sale of its petroleum business just as media speculation was beginning to peak over whether the company was serious in its sustainability initiatives or whether it was, indeed, all simply ‘rumour’.
If BHP was to go ahead to merge its petroleum division with Woodside Petroleum Ltd - the top independent gas producer in Australia - it would initiate the mining giant’s exit from the oil and gas industry. However, this is supposedly one of many options being considered by the mining giant as it reviews its fossil fuel assets in Australia, Trinidad and Tobago, Algeria, and the Gulf of Mexico. All in an effort to align its operational goals with that of the Paris Climate Agreement.
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“BHP confirms that we have initiated a strategic review of our Petroleum business to re-assess its position and long-term strategic fit in the BHP portfolio,” the miner announced in a statement.
“A number of options are being evaluated. One option is a potential merger of the Petroleum business with Woodside Petroleum Ltd (Woodside) and a distribution of Woodside shares to BHP shareholders. We confirm that we have been in discussions with Woodside. While discussions between the parties are currently progressing, no agreement has been reached on any such transaction.”
It’s predicted that BHP’s oil and gas unit could be worth a potential US$13bn, making it a major investment for Woodside, which holds a market value of around US$15bn.
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In response to the ongoing media speculation, a spokesperson for Woodside said: “Woodside is engaged in discussions with BHP regarding a potential merger involving BHP’s entire petroleum business through [the] distribution of Woodside shares to BHP shareholders.
“These discussions are ongoing. Woodside will continue to update the market in accordance with its continuous disclosure obligations.”
This isn’t the first step BHP has taken away from the prevalent influence of fossil fuels within the mining industry. Under Chief Executive Mike Henry, the company has sold its stake in a joint venture in two coking coal mines and has advertised its last remaining thermal coal mine for sale as the company switches to greener alternatives and lower-carbon power generation.