ExxonMobil, which owns the Bass Strait oil and gas fields off Victoria’s coast with BHP, announced in September it was putting its 50 per cent stake up for sale.
The joint venture, which dates back to 1964, supplies up to 50 per cent of Australian east-coast gas demand, but, more recently, its output from the oil fields has been in decline.
When asked if BHP was considering selling its stake as well, Ms Slattery said BHP was “considering all our options” in light of ExxonMobil’s move.
“In our view, it’s a complex transaction, not something that will play out quickly … it will take a couple of years,” Ms Slattery said.
“We are considering what that might mean to us.”
BHP did not see “material upside” in the oil fields beyond the 2020s, Ms Slattery said, but the company’s focus in the meantime was to continue to derive value from the project as demand remained strong.
In a briefing with investors and analysts, Ms Slattery pointed to a string of BHP’s growth projects which she said were capable of offsetting the diminishing output from its assets in the Bass Strait and North West Shelf. She discussed growth options including the Scarborough gas project with Woodside off the coast of Western Australia, the first phase of the Wildling project in the Gulf of Mexico, the Trion oil venture in Mexico and a gas project in Trinidad, all of which remain subject to capital allocation.
Last year, BHP ended its disastrous foray into shale by selling its US onshore shale oil and gas assets to BP for $US10.4 billion.
Although production volumes in the division have dwindled in recent years, the petroleum business, with its record of successful exploration and a pipeline of projects, had potential to support average annual volume growth of up to 3 per cent in the 10 years to 2030, she said.
According to BHP’s analysis, oil demand is expected to peak in the 2030s before experiencing a modest decline amid the electrification of the transport sector, which will transition away from combustion engines using petroleum products.
Half of the world’s cars and light vehicles would be electric by 2050, said BHP. But the company’s analysts forecasts demand from the global truck fleet to remain “resilient”, tipping demand may potentially rise from 14 million barrels of oil a day in 2020 to as much as 20 million barrels by 2050.
Demand for liquefied natural gas could nearly double by 2035, its analysis found, as LNG becomes increasingly used as a “transition fuel” in the shift from coal-fired power generation to renewable energy.
Tyler Broda, a mining analyst with RBC Capital Markets, said Ms Slattery had made compelling arguments on oil and gas and its place within the company’s portfolio. He said the long-term outlook was “robust”, adding that growth in BHP’s petroleum business could be a point of difference between BHP and its rival miners “as the mining sector struggles with peak iron ore as a longer-term theme”.
Business reporter for The Age and Sydney Morning Herald.