BP plans to exit the American onshore Wind Market with ten wind farms, as its new boss tries simplifying the business and boosting returns.
The FTSE-100 energy group is selling its existing US onshore winds farms. These wind farms span seven states, and have a combined power of 1.7 gigawatts.
BP said it would launch the sale process “shortly”, in an effort to become a more “focused, simpler, and higher-value” business. RBC Capital analysts estimate that the sale could bring in about $2 billion.
The remaining onshore operations of Lightsource BP will be consolidated with the solar business that it purchased at the end last year.
William Lin, the head of BP’s Gas and Low Carbon Energy division, said that while wind farms were “high quality” and “grid connected”, they did not align with BP’s growth plans. He said, “We believe that the business will be more valuable to another owner.” This planned divestment forms part of our ongoing strategy to simplify our portfolio while focusing on value.
BP wrote off $1.1 billion in its American offshore wind project after it agreed to dissolve a US Wind Partnership with Equinor. It also took full control of Beacon Wind, a project located near New York. Equinor has taken full ownership of the second joint venture project.
Bluebell Capital , the activist investor who previously led campaigns against Danone or Glencore, criticized the company for its investments in wind projects. The investor claimed that the investment could destroy shareholder value.
Murray Auchincloss is BP’s Chief Executive. He has previously reacted to critics of BP’s investment in renewable energy projects.
Murray Auchincloss was the BP CEO at the time. He argued that Bluebell “fundamentally misunderstood” the integrated strategy of the company.
Auchincloss (54), who was permanently appointed to the top position in January, aims to restore investor confidence after the abrupt resignation last year of Bernard Looney and close the valuation gap between rivals in oil and gas. BP shares are down 14 percent compared to Shell and other international peers.
The Canadian executive has laid out plans to reduce costs by at least $2 billion before the end of 2026. It has also frozen external hiring except for frontline positions, well-site leadership and other safety critical roles.
BP will provide an update to the market in February on its mid-term plans, along with its full-year results. This includes any changes made to its capital-allocation strategy. This will include a report on whether BP would reduce its target of reducing oil and gas production in 2030 by 25 percent compared to 2019 levels.
The company announced that it has struck a deal worth $1 billion with Apollo Global Management to acquire a non-controlling interest in BP Pipelines TAP Limited. This entity holds a 20% stake in Trans Adriatic Pipeline AG.
Trans Adriatic Pipeline AG is the owner and operator of the last 880km of Southern Gas Corridor, which transports gas from BP’s Shah Deniz field, located in the Azerbaijani sector of the Caspian Sea, to European markets such as Greece and Italy but not the UK.
Apollo and BP also said that they will look for additional investment partners, including in low-carbon gas assets and infrastructure.
Shares of BP closed at 406 1/4p, up by 2p or 0.5 percent.
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