Equinor ASA EQNR recently announced that the Hywind Tampen wind farm has been approved by the Ministry of Petroleum and Industry of Norway.
The approval came at a time when the coronavirus pandemic is causing huge energy demand destruction, pushing back the launch dates of energy projects. Moreover, with commodity prices currently in the bearish territory, the oversupplied oil market is suffering, which makes the outlook for exploration and production business gloomy. In fact, Equinor recently decided to cut 2020 investment from $10-$11 billion to $8.5 billion due to the low prices. Other energy majors like BP plc BP, Royal Dutch Shell plc RDS.A and Chevron Corporation CVX have also carried out similar moves.
The said project incorporates 11 floating offshore wind turbines that will generate a total of 88 megawatt of electricity. This will likely enable the company to supply 35% of power demand in five platforms in the North Sea. The platforms are Snorre A and B and Gullfaks A, B and C, which will be the first to receive power from a major floating wind farm. The turbines will be built 140kilometers off the coast, between the platforms. The farm will be developed at a water depth of 260-300 metres.
The project is estimated to cost NOK 5 billion. Equinor will receive financial support of NOK 2.3 billion from the Norwegian government and an additional NOK 566 million from the business sector’s NOx. Importantly, Hywind Tampen is expected to decrease CO2 emissions by more than 200 thousand tons per annum via reducing the usage of gas turbines. This will enable the company to reach its environmental targets. The project is expected to commence by 2022-end.
The Zacks Rank #3 (Hold) company’s shares have plunged 41.4% year to date compared with 26.2% fall of the industry it belongs to. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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