BP Acquired 50% Stakes in Equinor’s and Entered Partnership for Offshore Wind Projects
British leading oil and gas company, BP PLC (BP) has bought a 50% shares in two wind farms owned by a Norway-based oil refined company, Equinor ASA (Equinor) and entered into a partnership agreement between the two companies for future offshore wind projects in the United States (US).
BP’s head of gas and low carbon energy, Dev Sanyal said in a statement, BP and Equinor also agreed to form a partnership to develop other offshore wind projects in the US as part of the deal. The recent move of the British oil company represents a crucial step that would help to achieve its business goals and transformation towards green or clean energy. In the past, BP had been staying away from the offshore wind market.
Transition to Renewable Energy
According to a press release by Equinor, BP would now acquire “50% non-operated interests in the Empire Wind and Beacon Wind assets on the US east coast for a total consideration before adjustments of USD 1.1 billion.” Many experts considered that the recent deal was a part of the British oil giant’s goal to increase its renewable power generation capacity to 20 times over the coming decade to 50 gigawatts (GW).
Over recent years, European oil companies including BP have been struggling to transform their business from fossil fuels to green energy due to the immense pressure from activists, banks, investors, environmental groups, and government agencies. Through this deal, analysts suggested that BP probably saw the transition to offshore wind business could be the easiest way for shifting their energy operation and scale up their performance in the industry at the same time.
BP already has its wide onshore operation of wind business in the US that has a production capacity of around 1.7 GW. With the deal, these two energy farms could together generate energy up to 4.4 GW, which will be enough power for more than two million homes.
Operations and Terms of the Deal
As per the press release, the Empire project would commence its operations soon as the deal has an effective date from January 1, 2020, and would be close in early 2021. As per the deal, Equinor will lead the operations of the projects and BP staff will join the operations later.
Following the deal, the chief executive officer in Equino, Eldar Saetre said, “We look forward to working with BP who share our strong ambition to grow in renewable energy. Our partnership underlines both companies’ strong commitment to accelerate the energy transition and combining our strengths will enable us to grow a profitable offshore wind business together in the US.”
Executive vice president for New Energy Solutions in Equinor, Pal Eitrheim told, “It confirms that our strategy to get early access to the U.S. coast was right and it created the value.” He added, “Optimizing equity and bringing in new partners allow us to realize value, increasing our financial flexibility to fund further growth,” reflecting the prospect of the deal.