LONDON (Reuters) - Royal Dutch Shell Plc aims to sell its stake in one of the world's largest planned wind farms, drawing criticism from the UK government, its partners and environmentalists for jeopardizing the project.
By Tom Bergin
LONDON (Reuters) - Royal Dutch Shell Plc aims to sell its stake in one of the world's largest planned wind farms, drawing criticism from the UK government, its partners and environmentalists for jeopardizing the project.
The Anglo-Dutch oil major, whose corporate advertising focuses on its green energy initiatives despite these being only around 1 percent of its investments, said it was shifting its wind power focus to the United States, where it said government incentives offered competitive returns.
"As part of an ongoing review of projects and investment choices, Shell has taken the strategic decision to look at disposing of its shareholding in London Array," Shell said in a statement on Thursday.
!ADVERTISEMENT!Shell is one of three shareholders -- along with German utility E.ON AG and Denmark's state-controlled DONG Energy -- in London Array, which aims to have up to 341 turbines some 20km (12 miles) generating 1,000 MW in the Thames Estuary, east of London.
Paul Golby, Chief Executive of E.ON's UK unit said the decision put pressure on the 1.5 billion pound ($2.98 billion) project.
"At the very least, some delay to the project is now inevitable," he said.
Golby said rising steel prices and a tight market for turbines meant "the current economics of the project are marginal at best" and that Shell's exit is "a new element of risk into the project."
Shell's decision follows plans by rival oil major BP to review its renewable energy portfolio for possible part sale or flotation, after Chief Executive Tony Hayward decided his investors put little value on the assets.
CO2 CUTS AT RISK
Britain's environment minister also voiced concern.
"I have to say the news that Shell wishes to sell its stake is very disappointing," Hilary Benn said.
"And I think a lot of people would want to understand why, especially in a week in which the company has announced record profits."
Shell, the world's second-largest non-government controlled oil company by market value, reported a 12 percent rise in first quarter profits to $7.8 billion this week, thanks to record oil prices.
Environmentalists accused the Hague-based company of hypocrisy.
"We're very disappointed that Shell -- which touts itself as a progressive green company -- is pulling out of the London Array project and leaving a key clean energy project high and dry," Friends of the Earth Energy Campaigner Nick Rau said.
"It should be investing those profits in renewable energy projects not focusing its efforts on making money from sucking fossil fuels out of the ground and contributing to climate change."
Dean Cooper, Head of Alternative Energy at stockbroker Ambrian said Shell's withdrawal was a significant blow to the UK achieving its EU renewable energy targets.
(Reporting by Tom Bergin; Editing by David Holmes and David Hulmes)
