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JV to merge capacity of up to 13 gigawatts

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50-50 JV to spend up to $5.8 bln by 2030

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Major step in BP CEO's strategy to reduce renewables'

focus

(Adds JERA CEO comment, Jera Nex bp CEO name, background on

Shell, updates shares)

By Ron Bousso and Yuka Obayashi

LONDON, Dec 9 (Reuters) - BP and Japanese power

generator JERA have agreed to join forces to form one of the

world's largest offshore wind operators, a major step in CEO

Murray Auchincloss' efforts to reduce BP's focus on renewables.

BP's retreat from offshore wind reflects a similar trend at

rivals Shell and Equinor ( EQNR ), which are trying to

boost near-term profits by spending more on higher-return oil

and gas operations.

The 50-50 venture, called JERA Nex bp, will pool together

operating assets and development projects with a potential

generation capacity of 13 gigawatts (GW), the two companies said

in a statement.

The partners have agreed to provide up to $5.8 billion in

funding for projects approved by the joint venture by 2030, with

BP contributing up to $3.25 billion and JERA paying up to $2.55

billion as BP's assets in the JV have yet to be developed.

The JV will rank among the world's five largest offshore

wind operators behind Orsted, Iberdrola and

RWE, JERA Chief Renewable Energy Officer Satoshi

Yajima told reporters.

BP's Auchincloss has been under pressure since taking over

as CEO in January as the company's shares have underperformed

rivals amid concerns over its energy transition strategy.

BP shares were up 3.4% at 1307 GMT, outperforming the sector

on Monday. BP shares have declined 16% so far this year,

compared with a 2.1% drop for rival Shell.

Jefferies analyst Giacomo Romeo said the JV confirms his

view that BP will be able to lower its annual capital spending

below $16 billion and divest over $3 billion of assets.

Offshore wind was a pillar of former CEO Bernard Looney's

strategy to reduce BP's greenhouse emissions by rapidly building

up renewables capacity and slowing investments in oil.

Surging development costs, supply chain issues and higher

inflation have heavily weighed on the offshore wind sector in

recent years.

Auchincloss has said he will take a pragmatic approach by

focusing on the most profitable operations.

"This will be a very strong vehicle to grow into an

electrifying world, while maintaining a capital-light model for

our shareholders," Auchincloss said in Monday's statement.

BP also plans to sell its U.S. onshore wind business and a

stake in its solar business Lightsource BP.

Reuters reported in October that BP was considering selling

a minority stake in its offshore wind business, citing sources

with knowledge of the matter. In June Reuters reported, citing

sources, that the company had paused investments in new offshore

wind projects.

Last week, Shell signalled it was slowing down spending on

new offshore wind projects.

BP and JERA will contribute interests comprising around 1 GW

of net generating capacity from operating wind farms and a

pipeline of projects with around 7.5 GW of capacity, and further

secured leases with around 4.5 GW of potential capacity.

JERA, which is owned by Tokyo Electric Power Company ( TKECF )

and Chubu Electric Power ( CHUEF ), first entered offshore wind in 2019.

It later spun out its renewables assets into JERA Nex, which

owns and operates wind farms in Europe, Asia and Australia.

"We can't grow just by ourselves. We need scale, we need a

more diversified portfolio, we need a fuller set of

capabilities, and BP is the best choice for us," JERA CEO Yukio

Kani told Reuters.

BP entered the offshore wind market in 2019. It has a

development pipeline with a generation capacity of 9.7 GW

focused in the British North Sea, Germany and the U.S. East

Coast. It currently does not have any offshore wind farms in

operation.

JERA Nex bp will be based in London. Its CEO will be

nominated by JERA and the chief financial officer by BP. Kani

said JERA will recommend current Jera Nex CEO Nathalie

Oosterlinck to lead the JV.

The deal is expected to be completed by the end of the third

quarter of 2025.

Bank of America ( BAC ) is acting as financial adviser to BP and

Rothschild for JERA.