Woodside-BHP deal would create a climate policy monster

While the willingness of the world’s largest extractive companies and biggest investors to exit fossil fuels has been seen as a positive sign for decarbonisation, the assets left behind — while likely to eventually become stranded — are toxic enough to still poison the politics of corrupt countries like Australia.

Take BHP’s enthusiasm for getting out of thermal coal, gas, and oil, which are increasingly a turn-off for investors and prone to generating headlines by activists shareholders pushing for the company to dump both fossil fuels and any involvement with lobby groups like the Minerals Council, which spruik them.

The Australian Financial Review reported this morning that the latest deal could see BHP flog all its petroleum assets to Woodside, including its current North West Shelf joint venture with Woodside. The mooted cost of the deal — $20 billion — isn’t much less than Woodside’s current $21.4 billion market capitalisation.

That would make Woodside the undisputed king of fossil fuel companies in Australia and further bolster its already remarkable capacity to influence public policy. Remember that it was to help Woodside that Alexander Downer and John Howard ordered ASIS to bug the Timor-Leste cabinet in 2004 in order to secure better access terms to hydrocarbon assets beneath the Timor Sea, with Downer, and DFAT Secretary Ashton Calvert, later taking roles with Woodside.

Woodside has handed $2.57 million in donations to all sides of politics since 2004, and routinely employs figures from both sides of politics — two of its current directors are former WA state Labor treasurer Ben Wyatt and former Coalition resources minister Ian Macfarlane. Its influence over the WA Labor government of Mark McGowan — which has delivered time and again for the company — is extraordinary.

In fact Woodside is better understood not as a large corporation but a private arm of state and federal governments, wielding the kind of influence a large and lucrative GBE can wield within the corridors of power.

It’s also already one of Australia’s largest carbon emitters, producing nearly 38 Mt of CO2-equivalent gases once emissions from its exports are added to the those produced in its LNG operations. The company claims to have committed to net zero by 2050 but insists it can develop new gas projects within that — and has been allowed by the WA government to increase its emissions significantly this decade.

An effective doubling in size of Woodside’s capitalisation, given its close integration into government policymaking apparatus already, would only increase its ability to dictate policy to the WA state government and in Canberra — perhaps even to a point where Woodside is deemed “too big to strand” and its preservation becomes a deliberate focus of national policy.

It would concentrate fossil fuel power more effectively within governments already too inclined to follow whatever orders come from fossil fuel boardrooms and management.