BHP is optimistic about the future of the petroleum market, commenting that the outlook remains positive due to rising demand from the developing world and natural decline in supply.
The company’s expectations were revealed as part its 2019 financial year report, which indicated optimism despite crude oil prices being volatile in the second half of the fiscal year.
It attributed this to swings in global growth expectations, strategic behaviour of major producers, falling production in Venezuela and Iran, and geopolitical risk.
The prediction formed part of BHP’s recent decision to invest $US283 million ($417 million) in the development of the Ruby oil and gas project in Trinidad and Tobago.
The longer-term outlook for LNG also remains positive. according to BHP, which said it expected LNG to grow faster than overall gas demand.
Pointing to the Japan-Korea Marker price for LNG, which was lower on average in the second half of the 2019 financial year, BHP noted that this reflected slower growth in North Asian demand and a large increment of new supply from project ramp ups.
BHP continued to explore heavily in the 2019 financial year, spending $US685 million, with a further $US700 million expected to be spent in the 2020 financial year.
The company’s petroleum unit costs increased by five per cent to $US10.54 per barrel of oil due to planned maintenance, which was partially offset by producing higher volumes.
Looking ahead, BHP expects unit costs in the 2020 financial year to be between $US10.50 and $US11.50 per barrel, reflecting the impact of lower volumes, but partially offset by lower maintenance activities at its Australian assets.
In the medium term, BHP said it expected an increase in unit costs to less than $US13 per barrel as a result of natural field decline.