BP to crank up green investments

BP yesterday announced it is to invest $1.5bn (755m) in its alternative energy operations this year, but hinted that the increased spending could be a precursor to selling its Alternative Energy division.

In his first strategy update to the City, BP's new chief executive Tony Hayward said that investment in the green energy unit would increase from $1.1bn last year to $1.5bn in 2008, as it seeks to bolster capacity in its wind and solar operations.

However, he said the company would also undertake a review of BP Alternative Energy and hinted that a sale of the unit or stock market floatation remained a distinct possibility.

Hayward said that the company was looking to grow the division " predominantly for its equity value". He added that based on market valuations for similar firms, the unit was worth between $5bn and $7bn, but that that value was not being recognised in the oil giant's share price. "As we go forward we will be looking at how we can best realise that growing value for our shareholders," he said.

The comments prompted speculation that Hayward was preparing to offload the division, which had been the brainchild of his predecessor John Browne.

However, sources close to the company were reported to downplay the possibility, telling The Guardian that any sale would be some way in the future and was unlikely to see the whole division sold off.