Equinor parts ways with BP on US offshore wind projects
Reuters
Published Jan 25, 2024 20:16
Updated Jan 25, 2024 22:06
-Norway's Equinor said on Thursday it had entered an agreement with BP (LON:BP) to independently pursue separate wind projects under its bid for New York's offshore wind auctions.
As part of the agreement, BP would take over full control of the Beacon Wind project, while Equinor takes over the Empire Wind project, the Norwegian firm said.
"The agreement provides Equinor and BP with the flexibility to pursue their respective priorities under their corporate strategies," Equinor said.
New York State last year launched a new accelerated offshore wind solicitation in a bid to revive troubled projects and keep the state on track to meet its renewable energy goals.
The deadline for submitting proposals in New York's fourth large-scale offshore wind solicitation is on Thursday with awards expected in February.
Denmark's Orsted, Equinor and BP already have contracts to sell power in New York from offshore wind farms, but the new solicitation allows the companies to re-offer their planned projects at higher prices and exit their old contracts.
Taking 100% ownership in the Empire Wind projects and BP's 50% stake in an onshore terminal lease will result in capital spending to increase by around $1.2 billion in 2024 and by around $1.5 billion in 2025 before project financing, Equinor said.
The exit from Beacon Wind project and postponement of Empire Wind 2, however, would result in lower capital expenditure from 2027 to 2030, it added. While Empire Wind 1 was bidding into the latest solicitation, Empire Wind 2 will be matured for future rounds, Equinor said.
Equinor said it expected a combined reported loss estimated of around $200 million owing to the transaction, but would not impact its adjusted earnings. BP in a separate statement said it expects to recognise a pre-tax impairment charge of around $600 million in the fourth quarter 2023.
European energy companies have taken a combined $5 billion of writedowns on U.S. offshore wind projects that are not even completed, in part because their existing power sales contracts would not cover the cost of building and financing the projects.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.