Power Grid

British oil company BP is scaling back its involvement in renewable energy projects as it refines its 2020 strategy, shifting its focus back to oil and gas. According to the Washington-based Specialty Energy Platform, BP is considering selling a minority stake in its offshore wind projects as part of this realignment.

CEO Murray O'Kincloss has committed to steering the company toward high-margin projects, distancing himself from the strategy of his predecessor, Bernard Looney, which aimed to reduce oil and gas output while rapidly expanding renewables. BP has abandoned its goal of cutting oil and gas production by 25% between 2019 and 2030 but maintains its target of carbon neutrality by 2050.

The move to reduce renewable investments comes as shareholders question the profitability of the energy transition strategy, especially with rising profits from oil and gas. On October 17, 2024, BP's stock rose 1.15% on the London Stock Exchange.

BP has enlisted Bank of America to find partners for its offshore wind projects, aiming to reduce its investment share in these capital-intensive ventures. A BP spokesperson confirmed the company’s focus on becoming "simpler, more focused, and higher-value."

O'Kincloss, who became CEO in January 2024, also indicated BP plans to sell a stake in its Lightsource BP solar joint venture once it completes the full acquisition. Earlier reports in June suggested BP had paused investments in offshore wind, and by September, the company announced plans to sell its U.S. onshore wind projects, which no longer align with its growth strategy.

Although BP remains committed to some major offshore wind projects, it has shifted its recent investments toward solar, biofuels, and low-carbon hydrogen. By the end of June 2024, BP held stakes in offshore wind projects with a combined capacity of 9.6 GW in countries like Britain, Germany, the U.S., and Asia. It also secured rights to develop two offshore wind farms in Germany, totaling 4 GW in capacity, with a €6.7 billion investment spread over 20 years.

However, rising costs and supply chain challenges in the offshore wind sector, combined with increasing interest rates, have slowed progress. BP reported a $1.1 billion loss in U.S. offshore wind projects in 2023 and ended a joint project with Norway’s Equinor. These challenges have led other companies, including Macquarie and Orsted, to rethink their offshore wind investments.