BP is spinning off its wind farm business into a joint venture with its Japanese rival as the company returns to fossil fuels

BP will spin off its offshore wind farm business into a joint venture with a Japanese rival.

The deal comes as the energy giant’s boss Murray Auchincloss shifts focus on renewable energy and returns to its traditional focus on oil and gas.

BP has previously said it wants to be “a global leader in offshore wind energy” and is developing sites in Britain, the US, Germany, South Korea and Japan.

But investors are concerned about the sector’s low profit margins due to supply chain issues and increasing competition.

And Auchincloss is under pressure as its share price lags behind rivals. This year the share price has fallen by 16.6 percent, while Shell has only fallen by 1.9 percent.

BP shares rose 4.3 per cent, or 16.1p, to 393.85p yesterday.

The joint venture with Jera, called Jera Nex BP, will include assets and projects under development with a combined potential to generate 13 GW of power, a spokesperson for the companies said.

BP will contribute up to £2.5 billion and Jera – Japan’s largest power generation company – £2 billion for investments up to the end of 2030, although the companies indicated the amounts may be lower.

Analysts at investment bank RBC noted that BP previously planned to spend £7.8 billion on renewables over the 2022-2030 period, with offshore wind likely to have made up the largest share.

Even assuming £1.6 billion has already been spent, the latest announcement represents ‘a significant reduction in spending in this area until 2030’.

Offshore wind was a key part of former boss Bernard Looney’s strategy to reduce BP’s greenhouse gas emissions by rapidly building up renewables capacity and slowing oil investment.

But that has been reversed since he quit last year due to a sex scandal.

In October, BP abandoned plans to reduce fossil fuel production by 2030.

Auchincloss has said he will focus on the most profitable activities.

He said yesterday the joint venture would create one of the world’s five largest wind developers.

He added: ‘This will be a very strong vehicle to grow into an electrifying world, while maintaining a capital-light model for our shareholders.’

The offshore wind farm industry has faced rising development costs, supply chain issues and higher inflation in recent years.

RBC analysts said yesterday’s announcement “provides further evidence of evolving strategies (in energy transition), particularly in the offshore wind sector, given recent industry headwinds and a significantly changed interest rate environment.”