(Bloomberg) – BHP Group is considering pulling out of the oil and gas sector in a multi-million dollar move that would accelerate its exit from fossil fuels, according to people familiar with the matter.
The world’s largest miner is reviewing its oil business and considering options that include a commercial sale, said the sources, who asked not to be identified because the talks are private. The business, which is expected to make more than $ 2 billion this year, could be worth an estimated $ 15 billion or more, one of the people noted.
BHP’s energy assets make it an outlier among the world’s largest miners: rival Anglo American Plc has already abandoned thermal coal under pressure from investors, and BHP is trying to follow suit. The company has long said that oil was one of its strategic pillars and has argued that it will make money for at least another decade. But as the world tries to move away from fossil fuels, BHP wants to avoid sticking with assets that become harder to sell, the people said.
The discussions are still in an early stage and a final decision has not been made, according to the sources. A BHP spokesperson declined to comment.
The move comes at a time when Big Oil is looking for ways to respond to climate investor pressure, in some cases reducing its core production and adding renewable energy assets.
BHP wants to exit while it can still get a good price for the assets, so as to repeat the 2018 sale of its shale business to BP Plc for $ 10.4 billion, the people said. Unlike its big oil rivals, BHP does not depend on profits from the energy business, which are far below those of the company’s giant copper and iron ore divisions.
The timing could be good for an exit from the oil business. The economic recovery after the effects of COVID-19 has transformed the fortunes of oil producers, and Brent futures have risen 60% in the last year.
In contrast, the company’s efforts to exit thermal coal so far have been disappointing, after the first bids for mines in Australia fell short of the company’s own valuations last year.
Exiting both thermal coal and oil would help BHP present itself to investors as a commodity-oriented company of the future. The miner is also expected to approve a gigantic potash mine in Canada next month, which could make it a key supplier of this nutrient for crops once production begins. BHP is scheduled to present its annual results on August 17.
