BHP reminded us on Friday that its fortunes are still tied to carbon and fossil fuels, announcing two oil related investments worth $US804 million or more than $A1.09 billion.
In terms of BHP the sums are not that vast – after all it has already spent $US5.7 billion bringing the huge Jansen potash project in Canada to where the company will make a final go-ahead decision (or not) later this month.
This is spending in the carbon area despite the company’s recent blitz on its growing greenewables commodities such as nickel and copper.
The miner told the ASX that it had approved the latest stage of the huge Shenzi oil project in the Gulf of Mexico. The project had been listed as next cab of the rank for a decision in the company’s recent production and sales report.
The next project will be the huge multi-billion dollar Jansen potash project in Canada which is expected to go to the company’s board for a final decision shortly – possibly with the 2020-21 results around August 17.
BHP said on Friday the Shenzi North project will cost $US544 million ($734 million) with production expected to start in the 2024 financial year.
BHP says the capital expenditure approved represents a 100% share interest for a project in which it holds a 72% stake with Repsol holding the remainder. BHP says Repsol is expected to make a final investment decision later this year.
“The project offers very attractive returns at a nominal IRR of over 35 per cent, a breakeven of approximately US$25/bbl and a payback of less than 2 years,” BHP said in the statement.
BHP also said in the statement that the board has also approved $US258 million in capital expenditure to move the Trion oil project in Mexico into the Front End Engineering Design (FEED) phase.
“The focus of these studies will be on completion of the engineering, commercial arrangements and execution planning required to progress to a Final Investment Decision from mid-calendar year 2022.”
BHP says both assets provide attractive returns from relatively low carbon intensity resources.
BHP has been selling off its mines that produce thermal coal and lifting its exposure to so-called “future-facing” commodities including copper and nickel, revealing plans to expand its Mout Kieth nickel mine by 50% over the next couple of years.
