BP says it will continue design work on its multi-billion-dollar local renewable energy project book, as the dust settles from its global refocus on oil and gas.
BP Australia says it will continue design work on its multi-billion-dollar local renewable energy project book, as the dust settles from its parent company’s global refocus on oil and gas.
London-headquartered BP announced last night that it would scale back investment in its energy transition business globally by $US5 billion ($7.9 billion) per annum, to between $US1.5 billion and $US2 billion.
At the same time, it plans to boost its oil and gas investment to $US10 billion – in a bid to boost operating cash flow to $US2 billion per annum in 2027.
BP is also targeting $US20 billion worth of divestments through to 2027.
The move was billed a fundamental reset, and came amid reports of significant pressure from activist shareholder Elliott Investment Management which recently took a large stake in BP.
Locally the company had already “rephased” the planned delivery of its $600 million Kwinana biofuels refinery south of Perth earlier in February, in a move it said would improve capital efficiency.
But its WA renewable asset portfolio is multi-faceted and significant, headlined by the $55 billion Australian Renewable Energy Hub (AREH) where BP is operator, and where first power has been targeted by 2029.
BP owns 63.57 per cent of AREH, alongside Intercontinental Energy (26.39 per cent) and CWP Global (10.04 per cent).
The project is planned to connect to a common user transmission network, to be built by APA Group – a major part of the plan to decarbonise some of the state’s heaviest emitting projects.
The first phase of AREH will involve the delivery of renewable energy, but the project website states that power “could produce green hydrogen for local offtake”.
A final investment decision was previously slated for 2027.
The project book also includes hydrogen projects H2 Kwinana – which is in the running for funding from the federal government’s Hydrogen Headstart initiative – and the earlier stage GERI project in the Mid West.
A BP spokesperson told Business News in a statement that work would continue on the design of all three of the projects, but did not offer guidance on timings.
“The first phase of AREH intends to provide renewable energy to the Pilbara region which would be delivered to Port Hedland and Newman via the proposed Pilbara Green Link and common use transmission network,” they said.
“Over the last three years we have made significant progress to develop bp’s renewable fuels and hydrogen projects at our Kwinana Energy Hub.
“Prior to going to final investment decision, BP decided to rephase the Kwinana renewable fuels project to adjust the pace of delivery with a focus on improving capital efficiency and aligning with the external policy environment.”
BP said the company’s broader project pipeline’s development would be guided by global lessons, with a focus on meeting market demand and aligning with government policies.
“BP will continue to develop projects and apply lessons from other projects around the world that show significant capital efficiencies can be achieved, while better aligning with the development of markets and the policy environment,” the spokesperson said.
The company did offer not comment on whether any of its WA assets could be up for sale as part of the divestment push.
BP was last night unequivocal that oil and gas will be its focus in the years ahead.
Its parent company’s website now states the business “mostly produces, trades and sells oil and gas, alongside transition activities such as EV charging, bioenergy and renewables that are a much smaller but key part of our business”.
