[UPDATED] Energy Minister: BHP's US$28b merger not likely to affect Trinidad and Tobago operations

Tuesday 17 August 2021

BHP Billiton Invaders Bay Tower, Audrey Jeffers Highway, Port of Spain. - PHOTO BY SUREASH CHOLAI

Minister of Energy and Energy Industries Stuart Young on Tuesday said the proposed merger between Australian energy giants Woodside Petroleum and BHP "are not expected" to affect BHP's operations in Trinidad and Tobago (TT).

In a statement issued shortly before 10 am, the minister said the proposed merger and acquisition of BHP petroleum sector by the Woodside signalled the "continued evolution in the oil and gas industry."

He said he had spoken to BHP's country manager for TT Michael Stone about the latest corporate development which was announced early Tuesday.

"These types of acquisitions are not unusual. Within the past few years a similar acquisition of British Gas by Royal Dutch Shell was completed which saw the return of Shell to Trinidad and Tobago. This led to significant investments in TT."

"In the interim, BHP’s operations in Trinidad and Tobago are not expected to be affected and work continues on their significant projects Ruby and Calypso," he said.

Young said the Government will continue to communicate with BHP and looks forward to the unfolding of the merger and acquisition.

"The Ministry of Energy and Energy Industries on behalf of the Government, and people of Trinidad and Tobago, will continue to monitor these events and stay connected to BHP and Woodside to advocate for continued interest and investment in our country."

In a separate statement on Tuesday, BHP Trinidad said the proposed merger will not immediately affect the "existing operations and business plans in TT.

The company said the merger is subject to confirmatory due diligence, negotiation and execution of full form transaction documents as well as satisfaction of conditions precedent including shareholder, regulatory and other approvals. It is expected to be completed during the second quarter of the 2022 calendar year.

"Bringing the BHP and Woodside assets together will unlock synergies in how these assets are managed and allow capital to be deployed to the highest quality opportunities.

We’ve been doing business in Trinidad and Tobago for 25 years, and we’re committed to continue building our business here as part of the combined business, where we will be even better positioned to deliver the best outcomes during the energy transition," the company said.

The Energy Chamber is expected to issue a statement on the proposed merger later Tuesday.

Woodside Petroleum and the BHP Group announced the US$28 billion proposed merger early on Tuesday.

The deal is subject to stringent regulatory approvals in each country where BHP operates and is expected to be completed in the second quarter of 2022.

BHP's divestment of petroleum, which makes up just five per cent of its annual earnings, speeds up its exit from fossil fuels amid pressure from environmentally conscious investors, according to a Reuters report.

Local energy experts anticipate the local BHP assets will likely be sold.

A holding statement on BHP's website says the companies will seek to "combine their respective oil and gas portfolios by an all-stock merger to create a global top ten independent energy company by production."

It means that BHP shareholders will be paid in Woodside stock, giving BHP investors a 48 per cent stake in the merged group.

Once the approvals are obtained, the release said, "BHP’s oil and gas business would merge with Woodside, and Woodside would issue new shares to be distributed to BHP shareholders. The expanded Woodside would be owned 52 per cent by existing Woodside shareholders and 48 per cent by existing BHP shareholders.”

It said the transaction is subject to confirmatory due diligence, negotiation and execution of full form transaction documents, and satisfying conditions including shareholder, regulatory and other approvals.

The company said the proposed merger would create the largest energy company listed on the Australian Stock Exchange, with a global top-ten position in the LNG industry by production.

The combined company will have a high-margin oil portfolio, long-life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition.

The deal would see the disposal of some key assets, as well as investment in others, such as the Calypso field in TT, in the long term.

BHP also has operations in Australia, the Gulf of Mexico, eastern Canada, Algeria and Barbados.

In late June, BHP officials in TT met with the Prime Minister and other officials and reaffirmed their commitment to work together for the benefit of the population.

A statement issued by the Office of the Prime Minister then said BHP officials updated Dr Rowley about the company’s projects in TT, including Ruby/Delaware and the deepwater blocks off Trinidad's north and southeast coast.

Discussions also focused on BHP’s plans for future development and the potential of smaller associated oil and gas fields.

The Ruby Field is part of the Ruby-Delaware Field Development in Block 3(a), which will produce oil and natural gas resources using six development wells, with peak production rates expected at 12,000 bopd (barrels of oil per day) and 80 mmscf/d (million standard cubic feet per day) of natural gas.

All development wells are expected to be online at the start of the third quarter of 2021.

This story was originally published with the title "Trinidad and Tobago assets in limbo in US$28b BHP oil, gas merger" and has been adjusted to include additional details. See original post below.

Australian energy giants Woodside Petroleum and the BHP Group – which has significant investments in Trinidad and Tobago – announced a US$28 billion proposed merger on Tuesday.