BP forms offshore wind JV with Japan's JERA in renewables retreat

BP and Japanese power generator JERA have agreed to join forces to form one of the world's largest offshore wind operators, a major step in CEO Murray Auchincloss' efforts to reduce BP's focus on renewables. 

BP's retreat from offshore wind reflects a similar trend at rivals Shell and Equinor, which are trying to boost near-term profits by spending more on higher-return oil and gas operations. 

The 50-50 venture, called JERA Nex bp, will pool together almost all of their operating assets and development projects with a potential generation capacity of 13 gigawatts (GW), the two companies said in a statement. 

The partners have agreed to provide up to $5.8 billion in funding for projects approved by the joint venture by 2030, with BP contributing up to $3.25 billion and JERA paying up to $2.55 billion as BP's assets in the JV have yet to be developed. 

The JV will rank among the world's five largest offshore wind operators behind Orsted, Iberdrola and RWE, JERA Chief Renewable Energy Officer Satoshi Yajima told reporters. 

BP's Auchincloss has been under pressure since taking over as CEO in January as the company's shares have underperformed rivals amid concerns over its energy transition strategy. 

BP shares closed 4.3 per cent higher, outperforming the sector on Monday. BP shares have declined 15.5 per cent so far this year, compared with a 1.4 per cent drop for rival Shell. 

Jefferies analyst Giacomo Romeo said the JV confirms his view that BP will be able to lower its annual capital spending below $16 billion and divest over $3 billion of assets. 

Offshore wind was a pillar of former CEO Bernard Looney's strategy to reduce BP's greenhouse emissions by rapidly building up renewables capacity and slowing investments in oil. 

Surging development costs, supply chain issues and higher inflation have nevertheless heavily weighed on the offshore wind sector in recent years. 

Auchincloss has said he will take a pragmatic approach by focusing on the most profitable operations. BP plans to sell its U.S. onshore wind business and a stake in its solar business Lightsource BP. 

"This will be a very strong vehicle to grow into an electrifying world, while maintaining a capital-light model for our shareholders," Auchincloss said in Monday's statement. 

Reuters reported in October that BP was considering selling a minority stake in its offshore wind business, citing sources with knowledge of the matter. In June Reuters reported, citing sources, that the company had paused investments in new offshore wind projects. 

Hours after the announcement, BP's head of offshore wind Matthias Bausenwein informed staff he was leaving the company, a spokesperson said. 

Last week, Shell signalled it was slowing down spending on new offshore wind projects. 

BP and JERA will contribute interests comprising around 1 GW of net generating capacity from operating wind farms and a pipeline of projects with around 7.5 GW of capacity, and further secured leases with around 4.5 GW of potential capacity. 

JERA, which is owned by Tokyo Electric Power Company (TEPCO) and Chubu Electric Power, first entered offshore wind in 2019. 

It later spun out its renewables assets into JERA Nex, which owns and operates wind farms in Europe, Asia and Australia. 

"We can't grow just by ourselves. We need scale, we need a more diversified portfolio, we need a fuller set of capabilities, and BP is the best choice for us," JERA CEO Yukio Kani told Reuters. 

BP entered the offshore wind market in 2019. It has a development pipeline with a generation capacity of 9.7 GW focused in the British North Sea, Germany and the U.S. East Coast. It currently does not have any offshore wind farms in operation. 

JERA Nex bp will be based in London. Its CEO will be nominated by JERA and the chief financial officer by BP. Kani said JERA will recommend current Jera Nex CEO Nathalie Oosterlinck to lead the JV. 

The deal is expected to be completed by the end of the third quarter of 2025. 

Bank of America is acting as financial adviser to BP and Rothschild for JERA.   

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