Mining giant BHP has said it is reviewing the future of its petroleum business and is in talks over a merger for the arm with an Australian oil firm.
BHP, which is listed in both London and Sydney, told shareholders on Monday that it has started a strategic review to reassess the position of the petroleum business within its portfolio.
It said a “number of options are being evaluated”, including a potential merger with Woodside Petroleum.
The FTSE 100 firm added that any merger deal for its oil and gas assets with Woodside could see shares in the Perth-based business distributed to BHP investors.
In a statement, BHP said: “We confirm that we have been in discussions with Woodside.
“While discussions between the parties are currently progressing, no agreement has been reached on any such transaction.
“A further announcement will be made as and when appropriate.”
Analysts at Bernstein have estimated that the BHP division could be valued at around 13 billion US dollars (£9.4 billion).
The potential exit from oil and gas comes amid increasing pressure on large mining firms to reduce their exposure to fossil fuels and align more closely with the ambitions of the Paris climate agreement.
Last year, BHP also said it planned to reduce the size of its coal operation, selling its stake in a joint venture which operated two coking coal mines.
Mike Henry, who took over as chief executive in 2020, has said the group will expand further into commodities which can be used for low-carbon power generation and look further towards higher quality raw materials.
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