BP PLC — M&A Activity 2007

May 17, 2007

News Details

Ad-hoc | 17 May 2007 15:29

BP PLC announces re: Joint Venture

BP p.l.c. / Joint Venture

Release of an Ad hoc announcement according to § 15 WpHG, transmitted by
DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.

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May 17, 2007

Rio Tinto and BP join forces to develop clean energy worldwide

BP and Rio Tinto today announced the formation of a new jointly-owned
company, Hydrogen Energy, which will develop decarbonised energy projects
around the world. The venture will initially focus on hydrogen-fuelled
power generation, using fossil fuels and carbon capture and storage (CCS)
technology to produce new large-scale supplies of clean electricity.

Decarbonised energy projects are based on the conversion of fossil fuel
feedstocks such as coal, petroleum coke (a refinery by-product) or natural
gas, to hydrogen and carbon dioxide gases, with the carbon dioxide being
captured and sent for permanent storage in geological formations deep
beneath the Earth’s surface.

In power projects, the hydrogen would be used to fuel a gas turbine for
generation of industrial-scale supplies of electrical power. Full
integration with CCS technology would ensure that 90 per cent of the carbon
dioxide which would otherwise have been emitted to the atmosphere would be
safely captured and stored.

There is rapid worldwide development of new power generating capacity as
older power stations are replaced and new plants built to meet growth in
demand, particularly in the rapidly expanding economies of the developing
world. According to the International Energy Agency, about two-thirds of
the generating capacity that will be needed in the next 25 years has yet to
be built. Much of the growth will be in countries where coal is abundant
and so the fuel is expected to be a significant part of the energy mix.

The recent UN Intergovernmental Panel on Climate Change (IPCC) report into
the potential to mitigate the effects of climate change recognised that
reducing carbon dioxide emissions from power generation will be vital and
that technologies such as CCS will have a key role in meeting the
challenge. It also recognises the role of governments in putting in place
appropriate regulatory and support mechanisms to enable this to happen.

Hydrogen Energy will benefit from the world-leading capabilities of both
parent companies: Rio Tinto’s expertise and world-class assets in coal
extraction and supply; and BP’s experience and expertise in chemical
processing, low carbon power generation and carbon capture and storage.

Tom Albanese, Chief Executive, Rio Tinto, said: 'Coal is a key part of Rio
Tinto's energy business and we believe it has an essential role in
generating clean power in the future. The investment we are making in
Hydrogen Energy will allow us to deliver decarbonised energy and carbon
capture and storage. Although initial projects may be based on non-coal
feedstocks, they will be significant building blocks in the development of
coal gasification on an industrial scale. Investing now means we will be
well-placed to create value for shareholders from opportunities in the
emerging clean power market.'

Tony Hayward, BP group chief executive, said: 'Projects such as these have
the potential to help deliver the carbon emission reductions which
companies and countries around the world are now seeking. This will only be
possible if companies work together and work alongside governments. The
combination of skills and experience which BP and Rio Tinto bring will
allow us to accelerate the development and deployment of these important
new technologies and projects.'

Hydrogen Energy, whose final formation will be subject to regulatory
approvals, will identify and secure opportunities for decarbonised energy
projects worldwide, working with governments to determine appropriate
policies and regulatory regimes, and develop and operate the assets, with
partners where appropriate. The projects will typically use coal or
petroleum coke as feedstock; although in some cases natural gas may be
used.

The previously announced hydrogen-fuelled power projects in Peterhead,
Scotland and Carson, California will become part of Hydrogen Energy. As
part of the agreement, Rio Tinto will make a cash payment to BP of some
$32million, subject to post-completion adjustments.

Hydrogen Energy will be headquartered in Weybridge in the south-east of
England and will initially have a staff of 75 seconded from the parent
companies. The chief executive of Hydrogen Energy was today named as Lewis
Gillies, formerly head of BP’s hydrogen power business and its chief
financial officer as Peter Cunningham, formerly head of business evaluation
for Rio Tinto.

Notes to editors:

· Hydrogen Energy will be equally-owned by BP and Rio Tinto. Further
information on the company can be found at: www.hydrogenenergy.com

· BP, together with Scottish and Southern Energy, announced plans in June
2005 for its first hydrogen power project, in Peterhead, Scotland. The
planned project would use natural gas as a feedstock, generating some
475MW electricity and capturing and storing some 1.8 million tonnes of
CO2 a year in the North Sea Miller oilfield. Injection of the CO2 into
the oilfield would also increase recovery of oil from the reservoir by
an estimated 50-60 million barrels. Engineering design for the project
is complete and the partners hope the project will be able to take part
in the competition the UK government has announced to select which such
project should be supported. If the decision to go ahead with the
project were taken at the beginning of 2008, it would be expected to be
in commercial operation in 2011.

· The second planned hydrogen power project, in Carson, California, USA
would use petroleum coke as feedstock. In January 2006, BP and partner
Edison Mission Group announced plans to develop the 500MW power project
alongside BP’s Carson refinery, about 20 miles south of Los Angeles.
The project would capture some four million tonnes of CO2 a year and
transport it for reinjection into geological formations in southern
California for permanent storage. Subject to the successful outcome of
engineering studies and appropriate policy being in place, it is
anticipated the final investment decision could be taken in time for
the plant to be operational by the end of 2012.

· Rio Tinto is a leading international mining group headquartered in the
UK, combining Rio Tinto plc, a London listed public company, and Rio
Tinto Limited, which is listed on the Australian Stock Exchange. The
Group finds, mines and processes the earth's mineral resources - metals
and minerals essential for making thousands of everyday products that
meet society's needs and contribute to improved living standards. The
Group's major products include aluminium, copper, diamonds, energy
products (coal and uranium), gold, industrial minerals (borates,
titanium dioxide, salt and talc), and iron ore. Its activities span the
world but are strongly represented in Australia and North America.
There are also significant businesses in South America, Asia, Europe
and southern Africa. For further information, see: www.riotinto.com

· BP is one of the world’s largest oil and gas companies with operations
in more than 100 countries across six continents. The company’s main
businesses are exploration and production of oil and gas; refining,
manufacturing and marketing of oil products and petrochemicals;
transportation and marketing of natural gas; and a growing business in
renewable and low-carbon power, BP Alternative Energy. BP’s low carbon
interests combined in BP Alternative Energy include: BP Solar; the
company’s fast growing interests in wind power; gas-fired power
generation; and BP’s interest in Hydrogen Energy. For further
information see: www.bp.com and www.bpalternativeenergy.com.

Further information:
LONDON AUSTRALIA
Media contacts:
BPDavid Nicholas BPJamie Jardine
Office: +44 (0)20 7496 4708 Office: +61 (0)3 9268 3534
Mobile: +44 (0)7831 095541 Mobile: +65 9295 0887

Rio Tinto Rio Tinto
Nick Cobban Ian Head
Office: +44 (0) 20 8080 1305 Office: +61 (0) 3 9283 3620
Mobile: +44 (0) 7920 041003 Mobile: +61 (0) 408 360 101

Christina Mills
Mobile: +44 (0)7825 275605

Investor relations contacts:

BP
Nick Wayth
Office: +44 (0)20 7496 4638

Rio Tinto Rio Tinto
Nigel Jones Dave Skinner
Office: +44 (0)20 7753 2401 Office: +61 (0) 3 9283 3628
Mobile: +44 (0)7917 227 365 Mobile: +61 (0) 4 0833 5309

David Ovington Susie Creswell
Office: +44(0)20 7753 2326 Office: +61 (0) 3 9283 3639
Mobile: +44 (0)7920 010 978 Mobile: +61 (0) 4 1893 3792

– ENDS –

DGAP 17.05.2007

Language: English
Issuer: BP p.l.c.
1 St James's Square
SW1Y 4PD London Großbritannien
Phone: +44 (0) 207-496-4000
Fax: +44 (0) 207-496-4570
E-mail: ir@bp.com
www: www.bp.com
ISIN: GB0007980591
WKN: 850517
Indices:
Listed: Amtlicher Markt in SWX; Freiverkehr in Berlin-Bremen,
Stuttgart, München, Hamburg, Düsseldorf; Open Market in
Frankfurt

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