The world's largest mining company, BHP Billiton, announced multibillion dollar plans to expand its petroleum business on Wednesday, as low global oil prices continue to recover in slow motion.
The company will invest $5 billion in its oil and gas wing and consider new acquisition deals while costs remain low.
To investors, BHP president Steve Pastor said he expects crude oil to be in a shortage by next year, which will put the company in a position to supply fuel to growing markets at a hefty profit.
"While currently well supplied, underlying fundamentals suggest both oil and gas markets are improving more quickly than our minerals commodities," Pastor said.
The company will also consider deepening its stakes by up to $2.5 billion in its existing projects.
BHP's market research suggests a growing human population and rising incomes will cause global oil demand to significantly rise through 2025. It estimates that roughly one third of the increased demand will need to come from new sources.
BHP's shale assets are generating profits in the current market, the company said, adding that its per-unit costs from its conventional petroleum business stood at $10 per barrel for the remainder of the year. The figures are some of the best in the industry.
BHP Billiton (NYSE:BHP) reported a massive loss of US$6.385 billion for the fiscal year ending on June 30, after multi-billion impairments on U.S. shale assets and a burst dam in Brazil made it swing to its worst loss on record from the US$ 1.91-billion profit for the previous financial year.
Looking ahead, BHP expects global growth until the end of 2016 to "remain modest and subject to downside risks, including the uncertain economic consequences of 'Brexit".
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on… More