Investing.com — BP (LON:) is contemplating the sale of a minority interest in its offshore wind division, Reuters reported on Friday citing sources familiar with the situation.
This move is part of CEO Murray Auchincloss’s effort to narrow the company’s focus on renewables amid increasing pressure from shareholders regarding its energy transition plan, initially introduced in 2020.
Shareholder concerns have intensified as profits from renewable energy sources have dwindled, while oil and gas margins have improved.
To explore potential partners for this venture, BP has engaged Bank of America, the report added.
The company aims to lessen its financial burden associated with the substantial investments needed for developing offshore wind projects.
Despite these changes, BP remains dedicated to advancing its offshore wind initiatives. Additionally, the company has made investments in solar energy, biofuels, and low-carbon hydrogen recently.
Auchincloss, who assumed the CEO position in January, has expressed intentions to overhaul the company’s strategy by prioritizing high-margin sectors, moving away from his predecessor Bernard Looney’s aggressive expansion into renewables and reduction of oil and gas production.
In June, Reuters reported that BP had put a halt on investments in new offshore wind projects, and last month the company announced plans to divest its U.S. onshore wind operations.
Auchincloss also mentioned that BP intends to sell a stake in its solar joint venture, Lightsource BP, after completing its acquisition in the coming months.
Sources indicated earlier this month that BP has abandoned its earlier goal of reducing oil and gas output by 25% between 2019 and 2030, though it still aims to achieve net-zero carbon emissions by 2050.
A spokesperson for BP at the time emphasized that, as CEO Murray Auchincloss mentioned at the beginning of the year, the company’s strategic direction remains unchanged. However, they aim to operate as a simpler, more focused, and higher-value organization moving forward.
Currently, BP has no operational offshore wind farms but holds stakes in projects across Britain, Germany, the United States, and Asia, with a project pipeline totaling 9.6 gigawatts as of June, the report added.
Last year, BP secured the rights to develop, construct, and manage two plants in Germany, boasting a combined capacity of 4 gigawatts.
The company committed to an investment of 6.7 billion euros over two decades, anticipating the projects will become operational in the next ten years.
In the UK, BP is collaborating with EnBW on three wind farms located in the Irish Sea and the North Sea, which will have a total capacity of 5.9 gigawatts.
The offshore wind industry has encountered challenges in recent years, with escalating costs attributed to technical and supply chain issues, as well as rising interest rates, prompting many firms to reevaluate their investments.
Last year, BP recorded a $1.1 billion impairment linked to its U.S. offshore wind projects, as noted in the company’s annual report.
Subsequently, it dissolved a U.S. offshore wind joint venture with Norway’s Equinor.
Other firms are also reassessing their offshore wind investments or have reported impairments due to the increasing expenses of developing wind farms that can be situated over 100 kilometers from shore.
Reports indicate that Macquarie is seeking to sell its offshore unit, Corio, while Ørsted, the leading developer of offshore wind farms globally, has reduced its investment and capacity goals earlier this year, the report added.
Shares of the company were up 1.2% on Friday.