Pål Eitrheim, Equinor’s executive vice president for New Energy Solutions, spoke to Recharge hours after the announcement of its landmark US offshore wind deal with BP.

Through this deal, you are partnering with a very big rival in the oil & gas sector. Equinor already has a head start in offshore wind, which BP doesn’t. Aren’t you helping BP to catch up?

This is a transaction that creates value and increases returns of the US East Coast early-phase assets that we have in our portfolio. Obviously, it is a very good price and also means a significant capital gain of around $1bn.

It is also very much in line with the strategy that Equinor presented to the capital markets in February of this year, and it frees up financial capacity that we can also use to accelerate our growth in renewables.

I think this is very much a new kind of partnership within offshore wind, and it also provides us with a platform for growth in offshore wind. Both our companies have very high ambitions to create opportunities through the energy transition, and also to grow within renewables.

We think we can do more together than what we could do separately, and definitely as two large industrial companies [have] a lot of capabilities to lift offshore at scale, which the world will need to reach its climate targets as we move forward.

We have worked with BP for many years. We have a long experience of working well together in different projects around the world. We have a shared ambition of engaging in the energy transition, and deliver profitable growth in renewables.

And we are also complementary in the US, where we both have been present for a long time – BP in onshore wind and energy trading, and we very much on the offshore wind side. We think this is a partnership that will enable us to grow together going forward.

The oil & gas sector is in a major crisis because of low prices and diminished demand due to Covid-19. Do you think that will accelerate your move towards renewables? In your Q1 report, the word “renewable” is mentioned only twice, and you don’t state your revenue from green energy. It’s still all about oil & gas exploration and services. So the money you earn from renewables seems very low. How quickly do you think that will change?

In February, we presented a very aggressive growth plan to the capital markets within renewables. We have said that we will grow tenfold to 2026 with projects like Empire Wind phase 1, Dogger Bank, etc. And then we will grow 30 times to 2035.

So we have an ambitious industrial plan in place for growing in renewables. We recognise that this is still a business that we are building up, and we are really ramping up and accelerating this activity in the years to come.

The transaction that we have announced today, we think will reinforce our capability to grow within renewables in the US and also beyond.

As part of today’s deal, you also mentioned floating wind. How quickly do you think floating can grow? California recently said it is looking at providing more floating wind call areas off its central coast. How interesting would that be for Equinor, or your partnership with BP, and how quickly do you think you can grow in floating wind?

In Equinor, we have a lot of confidence in floating wind. We think that it is a question of when, not if, floating will become a really important part of offshore wind developments.

We are the biggest operator of floating wind projects in the world. In 2022, when the [88MW] Hywind Tampen project in Norway comes on stream, we will operate one third of the installed capacity in that space. That is clearly an area that is important for us.

The big issue with floating wind is like in bottom fixed: we need to scale up and get the synergies of scale to reduce the cost. We are continuing to pursue a prospect that can give us large projects that will serve to get the cost down to increase the competitiveness of floating.

And then there are some specific areas, and you mentioned California as an example. But you also have more of this in Asia, like Japan and South Korea, where the characteristics of their ocean is such that to have offshore wind, they will need to go [for] floating quite early.

And then we see other markets, like the UK, Norway, France, which are really active in developing their floating potential.

So, for us this is a strategic differentiator, and we are really eager to strengthen our position in floating wind.

You say it is a strategic differentiator. Do you think floating in some ways is a better fit for oil & gas companies than bottom-fixed offshore wind?

In general, when we look at offshore wind at Equinor, we see it as an extension of a lot of the capabilities that we already have in Equinor. And then we see it basically deployed in an adjacent industry.

Floating has some complexities, which we are used to from 50 years of offshore oil & gas experience that we can utilise in this area. The barriers of entry on the floating side are much higher than on the bottom-fixed side.

In the US, the BOEM (Bureau of Ocean Energy Management) has held back some projects on the East Coast, and there is concern that this could hold up the entire development process and may render some projects unviable. What is your view on the US permitting process?

We are monitoring that situation very carefully. But so far, for everything that we are doing in US, in our portfolio, is on track.

You said the North Sea, Baltic Sea and the US are Equinor’s expansion areas, and mentioned Japan and South Korea. Are there some other markets that could be very interesting in offshore wind for you?

As the world is really engaging on going net zero, and really driving and accelerating the energy transition, I think almost every market with a coastline to look for opportunities, to develop offshore wind. Clearly, we are following some of these emerging markets very carefully.

Wind

'We can do more together than apart': Equinor renewables boss hails BP deal