The BHP Group Ltd (ASX: BHP) share price is under the spotlight today as the resources giant considers its oil and gas future.
Is BHP exiting oil and gas?
BHP is considering getting out of oil and gas in a multi-billion dollar exit that would accelerate its retreat away from fossil fuels, reported by Bloomberg.
According to Bloomberg’s sources, BHP is reviewing its petroleum business and considering options including a trade sale.
As the world tries to shift away from fossil fuels BHP wants to avoid getting stuck with assets that may become more difficult to sell, Bloomberg’s sources said.
The deliberations are still at an early stage and no final decision has been made. Bloomberg’s sources asked not to be identified as the talks are private.
BHP petroleum results
In BHP’s FY21 update released yesterday, the June quarter saw a quarter on quarter increase of 6% to 27 million barrels of oil equivalent (MMboe).
The company said that its crude oil, condensate and natural gas liquids production decreased by 6% in FY21. This was caused by natural field decline across the portfolio, downtime at Atlantis and a highly active hurricane season in the Gulf of Mexico in the first half of the year.
Pressure for mining to go greener
There is increasing pressure on the resources industry to lower emissions and implement strong green policies. Fortescue Metals Group Limited (ASX: FMG) is one resource company that is in the process of completely pivoting its business to be 100% green.
BHP said it recognises “the importance of taking action to support efforts to reduce emissions across its full value chain” (the chain of business activities to create products/services). Part of BHP’s emission target is to partner with others along its value chain.
BHP’s 2030 emission goals
BHP has a goal to “support industry to develop technologies and pathways capable of 30% emissions intensity reduction in integrated steelmaking, with widespread adoption expected post 2030.”
The company also supports a “40% emissions intensity reduction of BHP-chartered shipping” of its products.
My thoughts on BHP and the share price
Businesses are being held more and more accountable for their emissions by shareholders, the general public and governments. Having a well thought out and easy to understand environmental plan is becoming an increasingly integral part of a business’ strategy.
The efforts companies make towards making their business green is somewhat on a scale, from not doing anything at all, to working towards 100% green business operations. BHP falls somewhere in the middle, its current emissions targets are not exactly revolutionary compared to Fortescue, but hopefully it is a start for BHP towards a more extensive green change.
BHP could follow Fortescue’s lead and work on revolutionizing the processes and products produced in the resources industry, which could give BHP a stronger moat as more of the world moves into being green conscious.
The BHP share price is up by over 1% today, however the ASX 200 (ASX: XJO) is also up around 1%. So it doesn’t look like this news has had a material effect on the share price (yet).
