Norwegian oil major Equinor ASA (OSE:EQNR) and British peer BP Plc (LON:BP) said on Thursday they will terminate their 50/50 offshore wind joint venture and bid separately in offshore tenders with projects in the Empire Wind and Beacon Wind lease areas.
The partners have agreed on a swap deal that will see Equinor to become the sole owner of Empire Offshore Wind Holdings LLC, which holds the 810-MW Empire Wind 1 and 1,200-MW Empire Wind 2 projects near Long Island, New York. The Norwegian group will also acquire BP’s 50% stake in the South Brooklyn Marine Terminal (SBMT) lease.
In return, BP will assume full ownership of the Beacon Wind lease projects off Massachusetts and New York held by Beacon Wind Holdings LLC – the 1,230-MW Beacon Wind 1 and Beacon Wind 2 with a potential capacity of 1,360 MW. The UK oil giant will also buy the Astoria Gateway for Renewable Energy converter station.
The proposed asset swap transaction, effective as of January 1 and expected to be finalised in the second or third quarter, is seen to be cash-neutral for the parties. According to the companies, the move will provide them with the flexibility to pursue their priorities under their individual corporate strategies.
After the deal was signed, Equinor said it had submitted a sole bid for the Empire Wind 1 project in New York’s fourth competitive offshore wind solicitation, which was launched last November and closed on January 25. In turn, Empire Wind 2 will be matured for future solicitation rounds.
The combined reported loss from the deal for Equinor is seen at USD 200 million (EUR 184.9m) if Empire Wind 1 is successful in the New York tender. Depending on that outcome, the Norwegian group expects to take a final investment decision (FID) for the project in mid-2024 and possibly bring in a partner “at the right time” to enhance its value.
On the other hand, BP expects a pre-tax impairment charge of USD 600 million in the fourth quarter of 2023.
(USD 1.0 = EUR 0.925)
