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Anglo-Australian commodities producer, BHP Billiton plc (LSE:BLT), is letting go of a minority stake in a natural gas project offshore of Australia as the company continues to reshape its portfolio to meet the changing landscape of resource markets.
The world’s largest mining group signed a definitive agreement, selling its interests in the Browse Joint Venture for US$1.63 billion, scheduled to be completed within the first half of 2013.
A number of firms formed a consortium for the development of the Browse LNG project, which has contingent resources of about 15.5 trillion cubic feet of gas and 417 million barrels of gas condensate discovered in 1971 off the coast of Western Australia.
BHP Billiton will sell its 8.33% and 20% interests in the East and West Browse JV, respectively, to PetroChina Company Limited, China’s largest state-owned oil and gas company and one of the largest oil and gas firms in the world.
Meeting Chinese Demand
China has been acquiring oil and gas assets and other resources around the world to meet its growing domestic demand, with a recent takeover of Canadian firm, Nexen Inc., by China National Offshore Oil Corporation (CNOOC), another state-owned company.
CNOOC is buying Nexen, the operator of the largest offshore oil field in the UK North Sea, for US$15.1 billion, in a deal that needed the nod of the Canadian Government in light of the sensitive issue of sovereign ownership of another state’s territory.
The government of the world’s second largest economy has been in diplomatic row with its Asian neighbours over sovereignty in a portion of the South China Sea, believed to contain billions of barrels of oil and gas deposits.
Around the world, a number of Chinese state-owned resource companies have acquired stakes in different countries, especially in Africa, equivalent to multi-billion dollar investments.
Simpler Business
BHP Billiton, for its part, has been selling off assets to maximise profit and drive cost down, amidst the backdrop of falling commodity prices and subdued demand from the Eurozone and the United States, both beset by economic and financial woes that intertwine both economies.
A month ago, BHP had agreed to sell its diamond business in Canada for US$500 million as the company tries to transform itself into a “simpler business”, whilst reducing capital expenditures due to weak commodity prices.
Today’s sale pronouncement, according to BHP Billiton’s Chief Executive for Petroleum, J. Michael Yeager, is the company’s way of exiting from a non-strategic asset.
In London, shares of BHP Billiton barely moved, rising 0.2% to £20.59 by 11:00 AM GMT, following the news.
