BP spins off its windfarm business into joint venture with Japanese rival as it moves back to fossil fuels
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BP is spinning off its offshore windfarm business into a joint venture with a Japanese rival. The deal comes as the energy giant’s boss Murray Auchincloss dials down the focus on renewable energy to move back towards its traditional focus on oil and gas.
BP has previously said that it ‘aims to be a world leader in offshore wind’ and is developing sites in the UK, US, Germany, South Korea and Japan. But investors have been concerned about low profit margins in the sector amid supply chain issues and growing competition.
And Auchincloss has been under pressure as the share price underperforms rivals. It is down by 16.6 per cent this year while Shell has fallen by only 1.9 per cent. BP shares rose 4.3 per cent, or 16.1p, to 393.85p yesterday. Oil man: BP boss Murray Auchincloss is dialing down the company's focus on renewable energy to move back towards its traditional focus on fossil fuels.
The joint venture with Jera, called Jera Nex BP, will include assets and projects in development with a combined potential to generate 13GW of power, a spokesman for the firms said. BP will contribute up to £2.5billion and Jera – Japan’s largest power generation company – £2billion for investments up to the end of 2030, though the companies pointed out that the sums may be lower.
Analysts at investment bank RBC noted that BP had previously planned to spend £7.8billion on renewables over the 2022-2030 period with offshore wind likely to have been the biggest part. Even assuming £1.6billion has already been spent, the latest announcement ‘represents a significant reduction in spending in this area out to 2030’.
