BHP Billiton - check the oil Never mind the iron ore, check the oil. BHP Billiton has been in the oil game for half a century. When BHP and Billiton merged in 2001, oil and gas were the biggest contributor to group earnings before interest and tax at 36 per cent, three times more than iron ore. As demand for its ore rose, investors asked whether the Anglo-Australian miner's oil business was so core. When it bid for Rio Tinto, they doubted the fit of BHP's oil assets much as they did Rio's aluminium gamble. Yet BHP's 1960s bet with Exxon on Australian offshore oil and gas and its mid-1980s move into the US look sweet given the run in the oil price. BHP's petroleum arm has been a constant contributor to underlying ebit over the past decade. Last year to June, the division contributed a quarter of the group's total. BHP makes much of its spread of resource bets. This week, it announced that average first-quarter output of its petroleum division hit a record of 666,000 barrels of oil equivalent a day, helped by resumed production at its Atlantis and Mad Dog deepwater wells in the Gulf of Mexico, operated by BP. Moreover, BHP expects "robust growth" for the rest of its 2012-13 year as US onshore wells come on stream. And about a third of its $23bn outlay on projects in execution will go on petroleum. True, shale gas has not been such a win: BHP took a one-off charge of $2.8bn on shale gas assets as a glut sent prices tumbling. But capital expenditure on shale can be turned on and off quickly, and payback is faster. But given the rebound in the oil price to around $115 a barrel from its $34 post-crisis low, should BHP get out while the going is good? The no argument hinges on the going getting even better. China accounts for 55 per cent of iron ore demand now. Steel intensity will tail off, however, and energy demand will grow. By comparison, China makes up for only 13 per cent of global crude oil demand now. But this rosy outlook would be reflected in any sale price. And, in any case, investors can always buy shares in an oil major to ride that demand. Oil has been a bonus for BHP. It should be thought about that way.