BHP chief executive officer Mike Henry has backed the company’s petroleum division as a core part of the business and its strategy despite uncertain times.
Acknowledging the impact of COVID-19 on the resources industry, Henry said the company had a strong balance sheet, diversified portfolio and that long-term supply and demand fundamentals remained sound.
“Even low case forecasts are for the world to consume another trillion barrels of oil over the next 30 years; that is relative to 900 billion barrels over the past 30. Also, conservative estimates put natural field decline at, say, 3 per cent per annum,” Henry, speaking at the Bank of America Securities 2020 Global Metals, Mining and Steel conference, said.
“This means that, unless demand is falling consistently at a rate greater than that, the world is going to need investment in fresh supply, which will support prices.
“I have to say it is hard to see demand falling year in and year out at greater than 3 per cent per annum.”
However, Henry highlighted that BHP was rigorously testing the downsides to its approach to investment and was not led by spot prices, with the company assessing its investments against a range of potential outcomes.
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