BP Cuts Offshore Wind Spending Plans in Tie-Up With Jera

BP Plc and Jera Co., Japan’s biggest electricity producer, will merge their offshore wind businesses as the British oil major seeks to cut its exposure to the troubled green power sector.

The new company — JERA Nex bp — will be funded with as much as $5.8 billion through 2030, a downgrade on BP’s previous investment plans in the technology. It comes as BP limits exposure to the high costs of renewable power while seeking to reassure investors who are more interested in the stronger returns from the company’s core fossil-fuels business.

BP shares gained as much as 3.9% on Monday, the biggest increase since April.

Soaring costs in recent years have upended the investment plans of some of the world’s biggest players in offshore wind. At the same time, BP has faced shareholder pressure over its energy transition strategy, first launched in 2020, as renewables profit has shrunk while oil and gas margins have risen.

The company recently indicated it won’t grow its pipeline of offshore wind further, and it saw the departure of an executive who had been brought in to expand that business.

BP will significantly limit its investment in offshore wind through the joint venture, contributing as much as $3.25 billion through the early 2030s. That’s less than half of the major’s previous estimates of what it could spend on offshore wind this decade.

“This will be a very strong vehicle to grow into an electrifying world, while maintaining a capital-light model for our shareholders,” BP Chief Executive Officer Murray Auchincloss said of the new venture.

JERA Nex bp is expected to be formed by the end of the third quarter 2025, the companies said in a statement Monday.

Combined Assets

The new entity, to be based in London, will include both companies’ offshore wind assets, including two projects planned by BP off the coast of the UK. BP won development rights for the British projects with a record-setting bid that came to signify the peak of the offshore wind hype cycle.

The joint venture will first focus on existing projects in Europe, Australia and Japan. Its CEO will be nominated by Jera and the chief financial officer by BP, according to the statement.

The companies will be have to be selective in deciding which projects to move forward, as it will be “difficult” to complete all them through new venture, Satoshi Yajima, Jera’s chief renewable energy officer, told reporters on Monday. “We don’t have unlimited funds or personnel, so we’ll select good projects based on stringent investment criteria,” he said.

Jera, a 50-50 venture between Tokyo Electric Power Co. and Chubu Electric Power Co., was created in 2015 to become one of the world’s biggest liquefied natural gas buyers. The firm said in May that it plans investments in LNG, renewables and hydrogen.

Bank of America is a financial adviser to BP in creating the new entity, while Rothschild is advising Jera.