Hydrogen to become 'material' part of BP business only in 2030s: CEO

London — Hydrogen will only become a "material" part of BP's business from 2030 onward, CEO Bernard Looney said Feb. 2.

BP has committed to becoming an integrated energy major with less focus on traditional oil and gas production.

Hydrogen, Looney said on a Q4 earnings call with analysts, would be an important fuel for the future, "but it's not something that's going to happen overnight in terms of being a material part of BP's portfolio."

"In terms of [being] material parts of the company, you are really looking at 2030 plus. You are looking at that decade," Looney said.

Nonetheless, Looney said BP believed in hydrogen and would "get after" building projects.

BP in November said it was joining forces with Denmark's Orsted for the industrial-scale production of green hydrogen at BP's Lingen refinery in northwest Germany.

The companies intend to build an initial 50 MW electrolyzer and associated infrastructure at the plant, powered by renewable energy generated by an Orsted offshore wind farm in the North Sea.

The hydrogen produced will be used in the refinery.

Looney said BP was also looking at the potential for export of ammonia out of Australia. "We're exploring many different options in this space. [Hydrogen] is definitely a gas fuel of the future, there's no question about that," he said.

In the UK, BP is working on a carbon capture and storage project at Teesside in northeast England.

"We'll hook it up with some local steel and fertilizer and ammonia factories up there and help them with their hydrogen production," he said.

"We need more of these opportunities being built around the world so that we can get the scale that will lead to cost reductions," he said.

Renewable returns

BP is looking to expand its position in renewable energy, but Looney said the company would be "disciplined" when it came to selecting projects to invest in, stressing the need for good returns.

"We're looking at all sorts of things, all the time," Looney said, adding that BP would pursue opportunities that can generate project returns of at least 8%-10%.

Most recently, BP closed a $1.1 billion deal at the end of January to buy a 50% interest in two major wind lease areas off the US East Coast from Norway's Equinor.

The partnership will develop up to 4.4 GW through two projects -- Empire Wind and Beacon Wind -- and pursue further growth in the US offshore wind market.

BP aims to grow its net renewable generating capacity from 2.5 GW in 2019 to 20 GW by 2025 and to around 50 GW by 2030.

It also aims to increase annual low carbon investment 10-fold by 2030 to around $5 billion/year.

However, Looney stressed that BP would continue to be selective, especially given the sheer volume of potential projects. "It's a hyperactive space, I would say," he added.

As an example, Looney said BP was looking at a particular opportunity in the US, but walked away because it "couldn't make the numbers work."

"If we can't make the returns work, we won't do the deals," he said.

Meanwhile, Looney said, BP's 50% owned solar venture Lightsource BP has been investing in projects and has done 30 with average 8%-10% rates of return.

This includes a solar project in Spain due online in the coming months, which has a seven-year power purchase agreement locked in with BP's own trading and shipping business.

This, Looney said, was an example of BP using its integrated model to "optimize returns across the value chain."