BHP’s strategic refocusing on raw materials for the energy transition is accelerating. The world’s largest mining group announced on Monday that it was in talks to transfer its oil and gas activities to Australia’s Woodside Petroleum. The group has long been involved in a strategic review of its portfolio and has to deal with pressure from investors and governments to reduce its carbon emissions.
“Rumors of an exit from oil have been circulating for a long time and as BHP faces increasing pressure on the energy transition, it seems that the conglomerate considers the optimal time to extract the maximum value from it”, analyzes Andrew Harwood of Wood Mackenzie . A view shared by Saul Kavonic of Credit Suisse. The petroleum products division “simply does not correspond to BHP’s portfolio and its long-term strategy anymore. […] BHP must have understood that it is better not to delay getting out of oil ”. BHP’s assets in the sector are valued at $ 15 billion.
The announcement comes a week after the Market Forces group representing 100 small investors proposed to submit a climate resolution to a vote at the General Assemblies in October and November. Activists urge the group to shut down its coal mines and oil wells, not to part ways with them. From this point of view, the operation is likely to disappoint them. Especially since one of the avenues explored to complete the transfer is to allocate Woodside Petroleum shares to BHP shareholders.
BHP’s black gold production, including Australia’s Bass Strait and the Gulf of Mexico, fell 6% last year. In 2018, the Anglo-Australian group sold the majority of its US shale oil activities to BP for $ 10.5 billion. In terms of oil extraction, BHP represents only 100,000 barrels per day against nearly 280,000 at the beginning of the 2010s.
No commitments on indirect emissions
Group CEO Mike Henry already announced a year ago that BHP would move out of fossil fuels – still 12% of its turnover – and focus on other raw materials like copper, one of its main sources of income after iron.
The London-listed company has decided to turn its back on thermal coal, which is used to generate electricity. At the beginning of July, Glencore decided to buy from BHP and Anglo-American the shares they held in BHP and Anglo American in their joint venture around the Cerrejón coal mine in Colombia, one of the largest surface mines. in the world.
Upon completion of the transfer, fossil fuel assets will be limited to a few coke coal mines in Queensland, an essential ingredient for turning iron ore into steel.
Although the group aims to achieve carbon neutrality by 2050, it has not yet made any commitments on indirect emissions, those resulting from the use of raw materials by its customers.