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BHP exits oil and gas

by LLB Reporter
22nd Nov 21 10:20 am

BHP is serious about the threat posed by mounting environmental pressures. The mooted deal to merge its oil and gas assets with Woodside, which was confirmed today, enables it to be clear of assets at the sharp end of the so-called energy transition.

While the pace of change remains open to question, the direction of travel for fossil fuels looks fairly clear.

“This deal will allow BHP investors to remain exposed to the petroleum industry should they wish – with shares in the new combined entity distributed to shareholders – but equally if they want pure mining exposure they can sell up and move on,” said AJ Bell’s Russ Mould.

“In order to pursue a move to cleaner forms of energy BHP clearly feels more scale is needed than its oil division had, and this is something the deal with Woodside aims to solve. However, Woodside’s decision to greenlight a new LNG terminal in Australia suggests it doesn’t see hydrocarbon demand disappearing overnight.

“BHP should now look more appealing from an ESG perspective with the metals it digs out of the ground fundamental to building the electric vehicle and renewables infrastructure required for the world to wean itself off oil, gas and coal.

“However, there will still be pressures to reduce the carbon footprint of its mining operations and this is likely to be an area of focus in terms of investment as BHP moves into its brave new future.”

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