BP Secures Funding for Advanced Green Hydrogen Plant in Germany

BP Plc BP has secured funding to advance the development of a groundbreaking green hydrogen plant at its Lingen refinery, marking the first fully owned and operated green hydrogen facility by the U.K. oil major.

The project is poised to significantly contribute to Germany's ambitious energy transition plans by reducing the reliance on natural gas and coal.

The innovative hydrogen plant will utilize a 100-MW electrolyzer capable of producing 10-11 kilotons of green hydrogen annually. This hydrogen will be generated through the electrolysis of water using renewable electricity, primarily sourced through an offshore wind power purchase agreement.

The green hydrogen produced will be utilized at BP's Lingen refinery and supplied to local industries, including steel and chemical producers, aiding in the decarbonization of their production processes.

The project, which was initially outlined in 2020 in collaboration with Orsted A/S, has now been expanded to a 100-MW capacity. Although Orsted has since withdrawn, BP has proceeded with the development, receiving vital funding from the Lower Saxony regional government and Germany's Economy Ministry. This support is part of the European Union's IPCEI Hy2Infra initiative, aimed at fostering the hydrogen economy across Europe.

The green hydrogen initiative at Lingen is a milestone for BP and the broader energy sector in Germany. By replacing traditional fossil fuels with green hydrogen, the project will contribute to a cleaner, more sustainable energy future. This aligns with Germany's broader objectives to pivot away from natural gas and coal, thereby supporting industrial decarbonization.

BP's green hydrogen project at Lingen surpasses similar projects, such as Shell Plc's SHEL Rheinland refinery, which launched a 10-MW electrolyzer in 2021. Shell aims to become a top supplier of green hydrogen for industrial and transport customers in Germany.

Additionally, BP is exploring green hydrogen production at its Castellon refinery in Spain, further emphasizing its commitment to sustainable energy solutions. With a history spanning more than 70 years, BP's Lingen refinery has been a cornerstone of energy supply for the German industry. The transition to green hydrogen marks a new chapter in its legacy, positioning BP at the forefront of the energy transition in Germany and Europe.

BP's Lingen green hydrogen project is set to play a crucial role in developing a hydrogen economy, serving as a building block for a sustainable energy transition. As Germany and Europe strive to reduce carbon emissions and enhance energy security, initiatives like BP's green hydrogen plant at Lingen will be instrumental in shaping a cleaner and greener future.

Zacks Rank & Stocks to Consider

Currently, BP carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked companies mentioned below. The companies presently sport a Zacks Rank #1 (Strong Buy).

Sunoco LP SUN is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes more than 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value and Growth Score of A.

The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.17, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.

SM Energy Company SM is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company's attractive oil and gas investments should create long-term shareholder value.

The Zacks Consensus Estimate for SM's 2024 and 2025 earnings per unit is pegged at $7.15 and $8.79, respectively. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2025 in the past 30 days.

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