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Oil and gas major BP has entered the offshore wind sector by agreeing to buy 50% stakes in two projects under development off the US’ east coast from Equinor.

The two energy giants will also work together on future projects in the US offshore wind sector.

BP will pay a total consideration before adjustments of $1.1 billion for a 50% stake in Equinor’s fully-owned Empire Wind lease, off the coast of New York state, and Beacon Wind, off Massachusetts.

The two initial projects are currently being developed with a combined capacity of just over 2GW. However, Equinor claims the Empire Wind site could support at least 2GW and Beacon Wind a further 2.4GW – for a combined capacity of more than 4.4GW.

Equinor paid just under $180 million for leases for the two sites: $42.5 million for Empire Wind in December 2016, and $135 million for Beacon Wind in December 2018.

It believes developing and building 810MW Empire Wind 1 will cost approximately $3 billion, according to its website, but has not listed an expected cost for 1230MW Beacon Wind 1 .

Executive vice president for Equinor’s new energy solutions division, Pål Eitrheim, said the transaction “demonstrates Equinor’s ability to create value from developing offshore wind projects”, and added: “Optimising equity and bringing in new partners allow us to realise value, increasing our financial flexibility to fund further growth.”

BP’s acquisition of the interests willcome into effect from 1 January 2021.

The $1.1 billion deal is due to close in early 2021 subject to customary conditions including purchase price adjustments and authority approval, the companies stated.

Equinor will remain the operator of the projects in the leases through development, construction and operations phases of the wind farms.

However, it expects the projects will eventually be staffed equally by Equinor and BP employees.

BP’s first foray into offshore wind follows new CEO Bernard Looney announcing a new strategy including ambitions to increase annual low-carbon investment ten-fold to around $5 billion a year by 2030. 

It invested about $500 million in renewable energy in 2019 – just a fraction of its total $19.4 billion capital expenditure in the year.

The oil and gas major aims to grow its operational renewable energy capacity from 2.5GW in 2019 to around 50GW by 2030. 

With a 50% stake in Empire Wind and Beacon Wind, the two wind farms would just over 1GW of new net operating capacity when they are completed in the mid-2020s. If the full 4.4GW-plus capacity is realised, the leases would add just over 2.2GW of new net capacity for BP.

BP’s CEO Bernard Looney added that the deal “will play a vital role in allowing us to deliver our aim of rapidly scaling up our renewable energy capacity, and in doing so help deliver the energy the world wants and needs.”