UPDATE 1-BASF to acquire 49.5% of Vattenfall's Dutch offshore wind park HKZ

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BERLIN/FRANKFURT, June 24 (Reuters) - BASF will buy 49.5% of Vattenfall’s future offshore wind park in the Netherlands, both companies said, as the German chemicals giant raises its investments in renewable energy to offset carbon emissions at production sites across Europe.

BASF will pay Sweden’s Vattenfall 300 million euros ($358 million) for the stake in Hollandse Kust Zuid (HKZ), with its total investment there amounting to 1.6 billion euros, they said on Thursday.

Vattenfall won permits for the wind farm in Dutch government tenders in 2018 and 2019.

Construction of the park will start in July, with the project expected to become fully operational in 2023, pending approval by the authorities and with its performance also hinging on the further development of renewable energy regulation.

The project, with 140 wind turbines and a total capacity of 1.5 gigawatts (GW), will become the world’s largest wind farm and supply power to BASF’s plant in Antwerp, Belgium, and to other European sites.

Shipping a significant part of power output to Vattenfall’s Dutch customers, it will be the first offshore wind park to be built without locking in subsidies for the electricity beforehand.

BASF - which aims to reduce its greenhouse gas emissions by 25% by 2030 and achieve net-zero emissions by 2050 - will get the electricity from its ownership share through a long-term power purchase agreement (PPAs).

PPAs are an increasingly popular financing tool in wholesale power markets that offers investors guaranteed revenue streams and gives customers supply security.

BASF said it intends to bring in financial co-investors further along the line to free up some of its initial capital outlay.

BASF and Vattenfall sector peer RWE announced a potential 4 billion euro ($4.9 billion) deal in May which entails the construction by RWE of a 2 GW offshore wind park by 2030 to supply BASF’s Ludwigshafen chemicals complex.

$1 = 0.8375 euros Reporting by Patricia Weiss, Riham Alkousaa and Vera Eckert, editing by Emelia Sithole-Matarise