BHP Urged to Close Down Gas and Oil Activities

Activist group Market Forces has submitted a resolution calling for Australia's BHP to draw up a plan to wrap up gas, oil and coal activities. Environmental groups have become increasingly active in Australia, where similar resolutions received strong support from Woodside and Santos shareholders earlier this year (LNGI Apr.15'21). The resolution comes as BHP -- a mining and petroleum conglomerate -- is rumored to be in talks with Woodside to sell some or all of its oil and gas assets. Woodside and BHP are joint-venture partners on key Australian projects including the Scarborough gas field off West Australia and the North West Shelf LNG plant (LNGI Aug.4'21). BHP is also involved in offshore gas projects in fading LNG exporter Trinidad (LNGI May4'21). The Resolution The resolution calls on BHP to draw up a plan to show how it will wrap up its gas and oil operations responsibly -- rather than selling them -- in line with its goal of achieving net-zero emissions from its own operations (Scopes 1 and 2) by 2050. It also requests BHP to disclose information such as estimates for decommissioning and site rehabilitation costs as well as details of how any remaining value in BHP's fossil fuel businesses could be reinvested or returned to investors. The resolution was submitted on behalf of more than 100 shareholders representing less than 0.01% of BHP's shares. BHP plans to respond to the resolution along with a voting recommendation over the coming weeks. BHP's annual general meeting will be held on Oct. 14 in London and Nov. 11 in Perth. Oil and Gas Divestment The initiative by Market Forces comes as BHP is reportedly seeking an exit from the oil and gas industry by selling all or some of its oil and gas portfolio to Woodside, with a deal possibly to be announced this month. Analysts have estimated that BHP's entire oil and gas portfolio could be worth US$15 billion, according to the Australian newspaper (LNGI Jul.29'21). Energy Transition BHP's energy transition strategy is based on expanding its exposure to commodities such as nickel, copper and iron ore, for which it expects demand to grow strongly as the world shifts away from fossil fuels. Copper and nickel are used to make batteries, while iron ore is used in wind turbines and the infrastructure that will be needed to achieve electrification at scale. Unlike the European oil and gas majors, BHP does not plan a foray into renewable power generation because it is "not naturally aligned with the BHP capability set." Marc Roussot, Singapore