BP to spend US$1.1b to enter offshore wind with Equinor

Oslo/London

BP entered the offshore wind market on Thursday with a US$1.1 billion deal to buy 50 per cent stakes in two US developments from Norway's Equinor, a significant step by the oil firm towards its energy transition goals.

The British oil and gas company has set itself a target of increasing its renewable power generation capacity by 20 fold in the coming decade to 50 gigawatt (GW).

"This is an important early step in the delivery of our new strategy and our pivot to truly becoming an integrated energy company," BP chief executive Bernard Looney said in a statement.

The deal with Equinor, which could be followed by further joint expansion, makes BP co-owner of the Empire Wind project off New York, as well as Beacon Wind off Massachusetts, which could together generate up to 4.4 gigawatt, enough power for more than two million homes.

Equinor said the two companies are establishing a strategic partnership for further growth in offshore wind in the United States, with both bottom-fixed and floating facilities.

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"The transaction is in line with Equinor's renewable strategy to access attractive acreage early and at scale, mature projects, and capture value," it said.

Equinor, which will remain the operator of the projects through the development, construction and operation phases, said the deal is expected to close in early 2021.

BP already has a large onshore wind business in the US with a capacity of around 1.7 GW, but has refrained in the past from entering the offshore wind market.

Equinor will make a gain of US$1 billion from the sale of the two projects, one analyst said, challenging the assumption that renewable projects do not offer the same return as oil and gas developments.

"With these returns for a farm-down it looks like Equinor has been (at) the very forefront of securing attractive acreage with huge value creation potential," Sparebank 1 Markets analyst Teodor Sveen-Nilsen said. REUTERS