Oil Is Dead. Long Live Oil

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What's going on?

The worlds most valuable mining company is closing in on a sale of its oil and gas business but BHPs move is unlikely to be a nail in the coffin for fossil fuels.

What does this mean?

While BHPs main business is extracting raw copper and iron ore, it also has a side hustle getting oil and gas out of the ground. At 9% of last years revenue, however, that activitys classed as non-core and with shareholder pressure mounting on the company to grow greener, selling the business seems like an easy win. It could also net BHP a handy $15 billion.



But not every company is embracing such green-sky thinking. Having recently reaffirmed its commitment to a gloopy black future, Saudi Arabian oil giant Aramco is currently in advanced discussions with Indias Reliance Industries to buy a 20% stake in the latters oil refining and chemicals business for $25 billion. After failing to get the deal over the line a year ago, both companies now appear keener than ever to seal some synergies.

Why should I care?

The bigger picture: Aramco is running its own race.


While many of the worlds oil-exposed firms scramble to clean up their acts, Aramcos getting its hands dirty: the publicly listed company plans to expand its oil production capacity to 13 million barrels a day, up from 12 million currently. That may fly in the face of a recent landmark climate change report calling for immediate action on carbon emissions but with the Kingdom of Saudi Arabia owning 98.5% of Aramcos stock, activist investors are unlikely to be a concern.



Zooming out: Greasing the wheels.


French auto part supplier Faurecia agreed to buy Germanys Hella for $8 billion over the weekend in one of the industrys biggest-ever deals. With annual sales of $27 billion, the combined company should be well placed to benefit from the future of transportation whether gas-guzzling, electric, or autonomous.

Originally posted as part of the Finimize daily email.

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