The world’s biggest mining company BHP Group Ltd (BHP) is considering the sale of its petroleum business as part of a strategic review.

What Happened: The Australian mining company said it is in talks with Perth-based oil and natural gas company Woodside Petroleum Ltd (WOPEY) over a potential deal to combine its petroleum unit with Woodside.  

BHP said it is evaluating a number of options for the unit as part of a strategic review but did not give further details. 

“One option is a potential merger of the Petroleum business with Woodside Petroleum Ltd (Woodside) and a distribution of Woodside shares to BHP shareholders,” BHP said in a statement, adding that no agreement has been reached.

Why It Matters: BHP's petroleum business is valued at least above $15 billion, as per analyst estimates reported by the Wall Street Journal.

The sale of the petroleum unit will help BHP reduce its exposure to fossil fuels amid growing pressure from governments for resources companies to cut emissions and focus on mined commodities. 

Price Action: BHP shares closed 1.36% higher at $77.82 on Friday and Woodside Petroleum shares closed 0.5% higher at $16.24.