BY Richard Summerfield
BP has agreed to sell its petrochemicals business for $5bn to INEOS in a deal that will boost the oil company’s under-pressure balance sheet.
Under the terms of the deal, INEOS will pay BP a deposit of $400m, followed by $3.6bn when the deal completes and another $1bn in three instalments by June 2021.
The sale will aid BP’s shift in direction. The company announced in February that it planned to sharply cut carbon emissions by 2050, and it intends to announce further plans for this change in September.
The petrochemical business includes stakes in manufacturing plants in the UK, the US, Trinidad and Tobago, Belgium, China, Malaysia and Indonesia, however the petrochemical plants attached to BP’s oil refineries in Gelsenkirchen and Mulheim in Germany will not be sold.
“This is another significant step as we steadily work to reinvent BP,” said Bernard Looney, chief executive of BP, in a statement. “These businesses are leaders in their sectors, with world-class technologies, plants and people. In recent years they have improved performance to produce highly competitive returns and now have the potential for growth and expansion into the circular economy. I am very grateful to our petrochemicals team for what they have achieved over the years and their commitment to BP.”
He continued: “I recognise this decision will come as a surprise and we will do our best to minimise uncertainty. I am confident however that the businesses will thrive as part of INEOS, a global leader in petrochemicals.”
“We are delighted to acquire these top-class businesses from BP, extending the INEOS position in global petrochemicals and providing great scope for expansion and integration with our existing business,” said Sir Jim Ratcliffe, founder and chairman of INEOS. “This acquisition is a logical development of our existing petrochemicals business extending our interest in acetyls and adding a world leading aromatics business supporting the global polyester industry.”
The COVID-19 pandemic has had a significant impact on the finances of oil producers around the world, accelerating BP’s need to cut costs and restructure. BP said the crisis would take as much as £14bn off the value of its assets and is cutting 10,000 jobs worldwide.
News: BP sells petchems arm for $5 billion in energy transition revamp