BP has recently made a significant strategic move by agreeing to transfer all its offshore wind projects into a joint venture with Japan’s largest power producer, Jera. This decision marks a shift in focus away from renewables and towards oil and gas ventures for the oil giant. The joint venture will see BP investing up to $5.8bn in existing offshore wind projects by the end of the decade, significantly reducing its previously anticipated investment of $10bn between 2023 and 2030.
The partnership with Jera is set to create one of the world’s largest global offshore wind businesses, with initial focus on projects in North-West Europe, Australia, and Japan. This move comes after BP put all new offshore wind projects on pause over the summer, as the company’s chief executive redirected attention towards fossil fuels. Murray Auchincloss, BP’s current head of the business, also halted hiring in the offshore wind division, signaling a strategic shift in priorities.
Investors have expressed dissatisfaction with BP’s performance following its green push under previous CEO Bernard Looney, who aimed to establish a renewables-focused business and achieve zero net emissions by 2050. BP’s share price has declined by more than 30% since early 2023, in contrast to rival Shell’s minor 2% decrease over the same period. The company’s recent deal with Jera emphasizes a focus on disciplined and value-driven development in the offshore wind sector.
The joint venture, named Jera Nex BP, is expected to be formed by the end of the third quarter next year and will encompass two projects planned by BP off the coast of Britain. The decision to shift focus from renewables to fossil fuels aligns with BP’s overall strategy and vision for growth in the energy sector. The move follows a similar announcement by Shell to no longer develop new offshore wind projects and to separate its power division into two connected businesses.
The offshore wind sector is crucial for Europe’s efforts to decarbonize electricity production, but recent challenges such as soaring costs and supply chain issues have impacted project development. By forming a strong partnership with Jera, BP aims to leverage its strengths in Europe and Asia-Pacific to create an innovative platform for growth in the evolving energy landscape. This strategic shift underscores BP’s commitment to adapt to changing market dynamics and position itself for long-term success in the energy industry.