Oil giant BP backs out of Australia Renewable Energy Hub in WA's Pilbara

Australia Broadcast Center

3 days ago

Global oil giant BP has backed out of its majority share in a $55 billion green energy hub in Western Australia's Pilbara region, dealing Australia's clean energy transition another major blow.
The Australia Renewable Energy Hub (AREH), 1,860 kilometres north-east of Perth, is tipped to deliver 26 gigawatts of solar and wind power by 2029, making it one of the largest renewable energy projects in the world.
If built, it will be the equivalent of about a third of all the electricity generated in Australia, and close to the country's entire current renewable energy production.
But the future of the hub is now uncertain.
The project has been touted as a major part of WA's renewables strategy, with the resources-heavy Pilbara producing more than 40 per cent of the state's carbon emissions.
However, BP is not the first company to pull its support, with Macquarie removing its backing last year.
BP has held 63.7 per cent of the AREH shares since 2022.
But the British multinational said it would exit the project as operator and equity holder because the project no longer aligned with BP's direction.
"This decision reflects BP's recent strategy reset, which will see BP grow its upstream oil and gas business, focus its downstream business, and invest with increasing discipline into the transition," a spokesperson told the ABC.
CWP and InterContinental Energy remain backers of AREH, with the latter assuming control of its operation.
InterContinental Energy chief executive Alex Tancock pledged to take the project to the next phase of development.
"We believe strongly in the project's potential to decarbonise the Pilbara and diversify the state's economy, and we look forward to delivering on this shared vision," he said.
AREH backers had pegged a 6,400 square kilometre footprint for the project north-east of Port Hedland, the world's largest bulk export port.
BP hoped to connect the hub to Port Hedland by a "Pilbara green link network", which could power major industrial proposals planned for the region, such as POSCO's Pilbara green iron project.
More than 1,700 wind turbines and hundreds of solar panels were slated for the site, along with 56-metre-high tanks for the storage of green ammonia.
Backers envisioned producing 10 million tonnes of the clean fuel source each year.
The substance would then be shipped overseas via a new $550 million cargo facility being built at Lumsden Point by the state and federal governments.
But BP's withdrawal leaves the future of the renewable energy hub in question.
University of Western Australia adjunct professor and director of Future Smart Stategies, Ray Wills, said he was unsurprised by BP's decision, which he labelled "sensible".
"They were particularly looking to produce hydrogen, and that really was the weakness of the project," Dr Wills said.
Dr Wills said the location of the project was also a major flaw, and Tasmania or Western Australia's mid-west region would be better suited.
"Pilbara's a difficult place to work in — it's expensive and the wind resources are less good," he said.
It is the third time BP has withdrawn from a WA-based alternative fuel project in the past six months, including its $1 billion Kwinana hydrogen and clean fuel projects.
Other oil and gas companies such as Andrew Forrest's Fortescue have been shifting away from green hydrogen projects across the world.
In its quarterly results announced this week, Fortescue said it would axe its hydrogen ventures in Queensland and Arizona.
Meanwhile, Woodside has walked away from a major US-based hydrogen project.
Despite this, Dr Wills said green hydrogen was not "pie in the sky" technology.
"The time is now, but the question is what you're going to do with hydrogen," he said.
"Hydrogen needs to be used for making green steel … putting it into a ship and shipping it somewhere else is not yet economic."
Despite BP's withdrawal, Dr Wills was confident the project would go ahead, eventually.
"The project will one day occur, it just won't occur on the time frame that's been offered," he said.
"It makes sense that we have to put renewables wherever we've got industry, to ensure industry can decarbonise.