(Bloomberg) —
BP Plc, the oil giant that announced a seismic strategy shift last month, made its first venture into offshore wind power with a $1.1 billion purchase of U.S. assets from Norway’s Equinor ASA.
The deal marks the start of an offshore-wind investment partnership in the region for the two companies, which have been at the forefront of the rapid changes in the oil industry as companies seek to adapt to the realities of climate change.
BP has taken the boldest steps so far in abandoning the oil-supermajor business model. Just six months after taking the helm, Chief Executive Officer Bernard Looney said in August he’d shrink oil and gas output by 40% over the next decade and spend as much as $5 billion a year building one of the world’s largest renewable-power businesses.
Read: BP Walks Away From the Oil Supermajor Model It Helped Create
BP will receive a 50% stake in the Empire Wind and Beacon Wind developments off New York and Massachusetts, respectively, the companies said in two separate statements on Thursday. Equinor will retain 50% in both, and continue to act as the operator.
Norway’s state-controlled Equinor has so far been the most aggressive oil major in offshore wind, seeking to capitalize on its experience in operating big industrial projects at sea. It’s now reaping the rewards of its early-mover status, expecting to book a $1 billion gain from the BP transaction.
Equinor last year sold half its stake in a wind farm off Germany, recouping its initial investment. Bloomberg has also reported that the company is in talks to reduce its stake in what will be the world’s biggest offshore wind farm in the U.K.
Equinor beefed up its climate strategy earlier this year, and incoming CEO Anders Opedal has vowed to increase the pace of the transition when he starts in November.
The Empire Wind project has a potential installed capacity of more than 2 gigawatts, and Beacon Wind more than 2.4 gigawatts. Together they’ll be able to power more than 2 million homes. Equinor earlier estimated total investments in Empire Wind’s first phase at about $3 billion.
(Updates with Equinor’s $1 billion gain from the transaction in fifth paragraph.)
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