London (Platts)--7Nov2008

BP has pulled out of the UK government's carbon capture and storage
competition, a spokesman for the company said Friday.

BP also confirmed a report it will now not go forward with plans to
develop wind farms in the UK, admitting that, after undertaking market
research, opportunities for wind investment are "more attractive" in countries
such as the US.

BP Alternative Energy had been among four contenders to win the UK
government competition for funding -- potentially worth hundreds of millions
of pounds -- to support a demonstration project that can capture 90% of the
carbon from a 400 MW coal-fired power plant.

However, BP spokesman David Nicholas said Friday that the company no
longer intends to enter a bid for the competition, having failed to find any
suitable bid partners.

"We prequalified as a lone player, with the intention of finding partners
for the project, but after six or seven months' work we do not believe we can
put together a consortium. BP won't be moving forward with the CCS
competition," Nicholas said in a call to Platts.

Nicholas said BP would instead focus its CCS efforts on working with Rio
Tinto to set up a "hydrogen power station" in California that would use CCS
technology to remove carbon from petroleum coke and coal.

He said BP had told the government of its intention to withdraw from the
CCS competition.

A spokeswoman for the Department of Energy and Climate Change said: "We
continue to have three strong bidders who are committed to the project and to
CCS. BP's decision does not compromise the integrity of the competition, nor
will it have a material impact on the robustness of the procurement process."

BP's withdrawal leaves just three possible competition winners: Denmark's
DONG with UK port operator Peel Holdings; E.ON UK with Tullow Oil, which has a
project for its planned new Kingsnorth, Kent, coal-fired power plant; and
Scottish Power with Marathon Oil, which has a project based at its Longannet
coal-fired power plant in Scotland.

COURT REVIEW

Meanwhile, RWE-npower, one of the big six energy supply companies in the
UK, is asking the UK's High Court to review the government's decision to leave
it off the shortlist.

"We were surprised and disappointed not to be shortlisted for the
government competition, especially given the strength of our project and the
range of experienced partners we'd brought together," the company said in an
email Monday.

"We do believe we should have been shortlisted and, as a prudent measure
to preserve our position, we submitted an application to seek a judicial
review of the process," RWE-npower said.

The application was submitted in late September, company spokesman Leon
Flexman said Monday.

The demonstration project must strip out the carbon dioxide
post-combustion, that is, after the coal has been burnt. The winner will
probably be known in 2009 and it is hoped that the project will be operational
in 2014.

BP also confirmed a report Friday in UK daily The Guardian that it had
dropped plans to develop wind farms in the UK, and is instead concentrating on
opportunities for wind investment in the US.

Nicholas said BP had been "looking at a number of opportunities for wind
projects in the UK" but decided that the US represented a better case for
investment.

"We're not going to be investing in wind in the UK now," Nicholas said.

BP's decision to focus wind development efforts in North America is in
line with a similar decision by its rival Shell earlier this year.