Thread Content
All indications suggest that oil assets are becoming less attractive for some large international companies. Recently, BHP Billiton, the world’s leading mining company, announced that it would completely exit the oil and gas business. All of its oil and gas assets, valued at approximately $15.4 billion, were sold to Australia’s Woodside Petroleum. A significant step has been taken to move away from oil, that superpower in the international oil market. 01 Complete withdrawal from the oil and gas business. Since the 1960s, BHP has been involved in oil and gas exploration, owning high-quality conventional oil and gas assets in various locations such as the Gulf of Mexico in the United States, Australia, Trinidad and Tobago, and Algeria. The oil and gas business was once highly valued by BHP Billiton and regarded as a key pillar of the company; however, with fluctuations in the oil market and increasing pressure to reduce carbon emissions, moving away from fossil fuels has gradually become the trend in this industry. In 2011, BHP Billiton invested a huge sum of $20 billion to acquire shale oil and gas assets in the United States, but this decision resulted in massive losses for the company. In 2018, BHP fully withdrew from the U.S. shale oil and gas market, with the British company BP acquiring it for $10.5 billion. Meanwhile, in the same year, BHP’s shale gas assets in the Fayetteville region of the United States were also sold to a subsidiary of Merit Energy for $300 million. As one of the world’s largest integrated mining companies, BHP Billiton’s business scope includes iron ore, copper, coal, oil, natural gas, and more. In terms of their contribution to profits, the oil and gas business is clearly no longer that important for BHP today; if it is not divested soon, it could instead become a burden to the company’s development in the future. According to the company’s latest financial report released on August 17, the operating profit for the 2021 fiscal year rose to $25.9 billion, while the earnings before interest, taxes, depreciation, and amortization amounted to $37.4 billion. Among these, the profit contribution from the oil sector has dropped to 6%. The largest source of profit comes from the iron ore business, which accounts for 70% of the total profits ； Next is the copper mining business, which accounts for 23% of the profit contribution. On the day the annual report was released, BHP announced that it would undertake a series of strategic adjustments, with the first step being to divest its oil and gas assets. It is reported that BHP’s oil and gas assets will be combined with Woodside’s to form a new company, valued at approximately $28 billion. The new company will become one of the top 10 global liquefied natural gas producers, with BHP’s shareholders holding 48% of its shares; it has no direct connection to BHP. In recent years, BHP has repeatedly divested its fossil fuel operations, and this time it has completely exited the oil and gas business. 02 Seeking a foothold beyond oil and gas: This landmark move by this international oil player has made the trend toward industry transformation even more evident. BHP’s CEO, Hamish Harding, said that this asset merger will facilitate the energy transition and enable BHP to obtain more capital to invest in other businesses. The global energy industry is going through a transition from reliance on fossil fuels to new energy sources, and storage technology is considered key to achieving this transition. Mineral resources such as copper and nickel form the basis for the large-scale expansion of energy storage devices, and this highly demand-driven market is regarded by BHP Billiton as one of the key elements of its future strategy. In July of this year, BHP announced a partnership with Tesla for nickel supply, to provide the essential raw materials for manufacturing power batteries. A complete withdrawal from oil and gas assets is a step taken by BHP Billiton in its pursuit of a lower-carbon future; it also reflects the developmental pressures facing the oil industry today. At present, the oil and gas market remains vast; however, concerns over environmental issues have affected investors’ willingness to invest in this sector. This month, the United Nations released a significant environmental report stating that a \"red alert\" has been issued for human survival, and more forceful measures must be taken to reduce carbon emissions. Although, in the long term, oil cannot be replaced as a basic raw material for chemicals, and natural gas, as a clean alternative energy source, holds great potential for development, it must be admitted that traditional fossil fuels have passed through their period of rapid growth and expansion and have entered a phase of stable development. Multiple international oil giants, represented by BP, Shell, Total, and others, are streamlining their oil assets and increasing investment in new energy sectors such as solar, wind, and hydrogen energy. Various types of resources competing on the same stage have become the main trend in the development of the energy sector. Reforming the structure of traditional oil and gas operations in order to find broader opportunities beyond petroleum is a common choice for the entire industry as it moves toward sustainable development