BP, Petronas in race to invest in Greenko founders’ new platform

Discussions have advanced with both parties and Greenko is expected to select one of the two energy majors for now, the people mentioned above added. Once concluded, this will be the biggest overseas investment in a green ammonia and hydrogen project till date in India.

It also comes when BP is under pressure from two of the UK’s largest pension funds, which oversee £130-billion assets. They have said they will vote against the renewal of the terms of top directors at BP and Shell unless both improve commitments to tackling carbon emissions.

BP India spokesperson however denied the development..” We would like to formally deny this story – BP is not making such an investment.”

After committing to a net-zero carbon emissions target by 2050, BP walked back on its pledge to cut oil and gas output by 2030. CEO Bernard Looney said the group’s oil and gas output would fall only 25% from 2019 levels by 2030, down from a previous target of 40%.

Platform Play

The new platform is planning to produce 4-5 MTPA of green ammonia, green methanol and electrolysers at Kakinada in Andhra Pradesh, incurring a capital expenditure of $10 billion. The platform has already signed offtake agreements with Posco of South Korea, Uniper SE of Germany, and state-owned ONGC for green molecules from 2025. It has also signed an agreement with Keppel Infrastructure Holdings Pte of Singapore to explore building a factory together. With Belgium-based John Cockerill, the new platform plans to set up a giga factory to make electrolysers that split water into hydrogen and oxygen.

The Kakinada project is a multi-phased export facility that aims to add up to 1 MTPA of green ammonia production capacity by 2027 and fits with India’s target of producing 5 million tonnes of green hydrogen per annum by 2030.

Phase 1 of the facility will produce green ammonia based on an electrolyser facility powered by round-the-clock power from 2.5 GW of renewable assets from the upcoming $3.5 billion Pinnapuram Integrated Renewable Energy Storage Plant in Kurnool district of Andhra Pradesh. That project will effectively turn 4,000 MW of intermittent solar and wind energy into firm, schedulable power via eight turbines that will rotate and generate current with water released from a manmade reservoir. This water, held initially at a lower level, will be pumped to the upper lake by energy harvested from green sources such as solar and wind before it’s released. The technical term for this is pumped-storage hydropower.

Greenko and Petronas didn’t respond to queries.

The new platform will be kept separate from Greenko Energy Holdings, which is 52% owned by GIC of Singapore. Orix Corp of Japan owns 22% with Abu Dhabi Investment Authority holding 14%. Chalamalasetty and Kolli own 12% of Greenko Energy Holdings.

The Greenko founders may also rope in some of the existing financial investors along with new ones for the venture, said people aware of the matter. The strategic partner may also double down on its stake in the future.

Nudged by geopolitical changes in the wake of the Ukraine war, the new hydrogen-centric economy is attracting multi-billion dollar funding. According to BloombergNEF, annual hydrogen demand may quintuple to 500 million tonnes by 2050. The US alone has earmarked $9.5 billion in grants and announced production tax credits under the Inflation Reduction Act. Germany will spend $21 billion by 2026. The Port of Rotterdam is studying an ammonia cracker. South Korea is building a green ammonia import terminal.

India Presence
Both Petronas and BP have been exploring cleaner, greener alternatives in India and worldwide.

Petronas acquired Amplus Energy Solutions Pvt. Ltd, one of India’s largest rooftop solar power producers, in 2019 from New York-based I Squared Capital for Rs 2,700 crore and has been looking to double down in one of the most promising emerging green economies to diversify its portfolio.

It spent almost a year unsuccessfully negotiating with the Tata Group for an investment in the conglomerate’s green energy business. The company is also present in India through its lubricants business.

Petronas also has an over two-decade-old 50:50 joint venture with Indian Oil Corp. for the import of LPG. The scope of this joint venture, IndianOil Petronas Pvt Ltd (IPPL), is being expanded to include fuel and natural gas marketing, the companies had said in 2021. Until 2021, India contributed 2% to Petronas’ revenue through the sale of crude oil and condensates and petroleum products, according to the company’s annual report for that year.

Reliance Industries and BP through their 2011 equal joint venture, India Gas Solutions, are engaged in the retailing and marketing of natural gas. Through their joint venture Reliance BP Mobility Ltd, the companies retail fuel through a network of over 1,400 sites and 30 aviation fuel stations across India. They plan to take this to 5,500 retail sites and 45 aviation fuel stations over the next few years.

Lightsource BP is an international solar business that, according to its website, operates exclusively in India through EverSource Capital, a partnership between Everstone Capital and Lightsource BP. Lightsource BP’s first solar project in India was completed in Wagdari, Maharashtra, in June 2018. This 60 MW peak solar farm is spread across 240 acres and provides clean electricity for approximately 75,000 homes in India. Eversource is in the shortlist for the $2 billion acquisition of Continuum Energy.