Written by Andres Gonzalez and Ron Busso
LONDON (Reuters) – BP is considering selling a minority stake in its offshore wind farm business, four people familiar with the matter said. It is the latest effort by CEO Murray Auchincloss to scale back the energy company’s focus on renewable energy.
The company is facing pressure from shareholders over its energy transition strategy, first launched in 2020, as profits from renewables have declined while margins from oil and gas have increased.
The London-listed oil company has contacted Bank of America to find a partner for the venture, the people said, asking not to be identified because the process is private. BP wants to reduce its share of the huge investments needed to develop these projects, two people familiar with the matter said.
A BP spokeswoman declined to comment.
BP remains committed to developing major offshore wind projects, one of the people said. The company has also invested in solar power, biofuels and low-carbon hydrogen in recent months.
Auchincloss, who took over in January, has moved away from his predecessor Bernard Looney’s strategy of rapidly expanding renewable energy and reducing oil and gas production, focusing on high-margin businesses. He vowed to revise the company’s plans to do so.
Reuters reported in June that the company had suspended investment in new offshore wind projects, citing people familiar with the matter. BP last month announced plans to sell its U.S. onshore wind power business.
The CEO also said the company plans to sell its stake in its solar power joint venture, LightSource BP, once BP completes a full acquisition in the coming months.
Sources told Reuters earlier this month that although BP had abandoned its flagship target of cutting oil and gas production by 25% between 2019 and 2030, it still aims to cut carbon emissions in real terms by 2050. The company remains committed to its goal of reducing emissions to zero.
“As Mr. Murray said at the beginning of the year, our direction remains the same, but we are delivering a simpler, more focused and higher value company,” a BP spokesperson said at the time.
BP stock rose 1.15% on Thursday.
BP currently has no offshore wind farms in operation. The offshore business has stakes in projects in the UK, Germany, the US and Asia, and had a pipeline of projects with 9.6 gigawatts of capacity at the end of June.
Last year, BP won the rights to develop, build and operate two power plants with a capacity of 4GW in Germany. BP has pledged to pay 6.7 billion euros ($7.27 billion) over 20 years if the project becomes operational within the next 10 years.
In the UK, BP and partner EnBW are developing three wind farms in the Irish Sea and North Sea with a total capacity of 5.9 gigawatts.
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The fast-growing offshore wind sector has had a tough few years as technology and supply chain issues and rising interest rates have driven up costs and caused many companies to reassess their investments.
BP recorded $1.1 billion in impairment charges related to U.S. offshore wind projects last year, according to the company’s annual report. The company subsequently dissolved its offshore wind power joint venture with Norway’s Equinor in the United States.
Other companies are also reconsidering investments in offshore wind or assuming write-downs due to the rising costs of developing wind farms located more than 100 kilometers offshore.
Reuters previously reported that Macquarie had put its offshore power unit Corio up for sale, and Orsted, the world’s largest offshore wind developer, lowered its investment and capacity targets earlier this year.
(Reporting by Andres Gonzalez; Editing by Jane Merriman)
