BP’s decision to withdraw from the $55 billion Australian Renewable Energy Hub (AREH) in Western Australia marks a notable pivot in the company’s energy transition strategy and underscores broader questions about the pace and economics of large-scale green hydrogen development.
Initially acquiring a 40.5% operating stake in 2022 and later expanding its share to 63.57%, BP had positioned itself as the lead partner in the 26 GW Pilbara project—expected to produce up to 1.6 million metric tons of green hydrogen annually. Yet, in line with its recent strategy reset, BP has informed partners InterContinental Energy and CWP Global that it will relinquish both its equity and operatorship. The company cited a renewed focus on expanding upstream oil and gas, consolidating downstream assets, and adopting a “disciplined” approach to transition investments.
This move raises immediate operational implications for AREH. InterContinental Energy, holding roughly 26% of the project, is set to assume leadership and has reiterated its commitment to advancing the hub, emphasizing its potential to decarbonize Western Australia’s Pilbara region and diversify the local economy. CWP Global, which owns around 10%, remains involved, but the shift in ownership structure may affect financing timelines and strategic partnerships—critical factors for the development of this scale.
The AREH is not an isolated case. BP’s withdrawal comes shortly after Fortescue confirmed it would scrap its 50 MW PEM50 hydrogen project near Gladstone, along with another U.S.-based green hydrogen initiative. Fortescue’s recently opened 2 GW electrolyzer manufacturing facility in Queensland has also been shut down, with the company stating that the associated assets and land are now under review for repurposing.
These developments point to a pattern of reassessment within the hydrogen sector, particularly regarding capital-intensive projects in regions still building the infrastructure, policy frameworks, and export agreements needed to support large-scale operations. While AREH’s geographic location offers vast renewable resources and proximity to Asian markets, challenges remain in cost competitiveness, grid integration, water supply, and securing long-term offtake agreements that align with volatile global demand projections.
